THORSwap: Cross Chain Swaps vs Same Chain Swaps

THORSwap, a decentralized exchange (DEX) powered by THORChain, is often referred to as the UNSWAP of the internet of blockchains. THORSwap enables anyone to swap tokens across blockchains without converting tokens into wrapped tokens. If you wish to exchange your ETH tokens for BTC tokens as an example, without THORSwap you would be able to trade your ETH for Wrapped BTC (WBTC) tokens. In contrast to that, THORSwap allows you to exchange your ETH directly for BTC. In other words, there will be no wrapping and unwrapping involved. 

So it is clear by now that the THORChain & THORSwap are built to enable cross-chain swaps. Well, at least in theory! But what does it look like in practice? Do THORSwap users use it to swap tokens across chains, or do they use it for token swapping within the same blockchain? In this post, let us investigate this further.

Taking a closer look at the THORSwap transactions that have occurred in the last 90 days and investigating what is happening, we would like to gain insight into the user’s behavior.

Before we present you data & walk you through charts, lets us make sure we are on same page with few definitions

  1. Cross Chain Swaps: Any token swap operation that takes place on the THORChain that involves tokens from two different chains is considered to be a cross chain swap. If, for instance, a user swaps ETH tokens from the Ethereum blockchain to BTC tokens from the Bitcoin blockchain, then that operation would be considered a cross-chain swap.
  2. Same Chain Swaps: Any token swap operation that takes place on the THORChain that involves tokens from a single chain is considered to be a same chain swap. As an example, if a user swaps ETH of the Ethereum blockchain for USDC tokens of the Ethereum blockchain, then it is considered a same chain swap.

Now that we are on the same page regarding definitions, let’s move on to charts and numbers. The following chart shows the total volume of transactions happed on THORSwap in the past 90 days. Surprise! Surprise!! 61% of swap volume on THORSwap is from Same Chain swaps!

Same Chain Swaps are dominant on one chain in particular, or are they spread equally among all blockchain users? We can see from the chart below that Binance Blockchain users are performing lots of same chain swaps. While Ethereum has a robust ecosystem of Distributed Exchanges such as UniSwap, SushiSwap, and several other applications, THORSwap is used by Ethereum users to swap Ethereum based tokens.

For obvious reasons (lack of additional tokens) we don’t find any Same Chain swap operations on Litecoin, Bitcoin and Bitcoin cash networks. The following chart shows weekly swap volume of Same Chain swaps on Binance & Ethereum.

Even though THORSwap was built to facilitate cross-chain swaps, many users are using it to facilitate same-chain swaps as well. It is especially the Binance Chain users who use it to exchange Binance Tokens.

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