THORChain

A BTC-to-ETH order begins on Bitcoin, not inside an EVM wrapper. The inbound reaches an Asgard vault; Bifrost observers translate it into a common witness; the state machine executes BTC:RUNE and RUNE:ETH; an outbound vault signs native ETH. The trader sees one route, while RUNE gives every ordinary pool a common balance sheet.

That common asset makes RUNE useful without making it a receipt for everything the network holds. A pool unit accounts for liquidity; a node bond backs an operator; RUNE in a wallet is simply the native asset. The reviewed documents do not turn that wallet balance into ownership of Bitcoin in Asgard, a guaranteed exchange rate or a slice of network revenue.

Each node runs chain clients and Bifrost, votes on observations and joins threshold ceremonies. A vault key is divided across a supermajority, while sharding limits how much value one signing group handles. Churn retires old vaults and creates new ones as the active set changes. Bonds and slashing add an economic cost to bad behavior.

The architecture still has human-operable brakes. Node Mimir can stop trading without stopping observation, stop signing while outbounds queue, pause liquidity, or stop a chain client entirely. Solvency reports can set halts automatically. Those distinctions matter to a user: a displayed quote can be stale, a deposit can wait, and an outbound can remain queued even though the THORChain ledger continues producing blocks.

In July 2021, two Ethereum router exploits manipulated what Bifrost believed had arrived. The official post-mortem said the interface trusted event behavior it had not fully bounded; Ethereum and economically significant ERC-20 assets were taken, trading returned too early once, and the treasury promised to cover LP losses. The failure lived between an external smart contract and the observer.

On 2026-05-15, the attack moved deeper. A new node bonded about 635,000 RUNE, entered one of five vault groups and deliberately failed GG20 rounds 864 times over roughly two and a half days. Tiny key-share leaks accumulated until the attacker could reproduce the private key and issue signatures indistinguishable from authorized ones. About $10.7 million left one vault. Automatic solvency halts reacted after the mismatch; four vaults and EdDSA-secured Solana were not exposed.

Recovery also changed what outsiders could verify. v3.19.0 announced extra security patches in a private binary. The network could resume with unpublished defenses, but independent reviewers could not reproduce the complete deployed TSS implementation from the public THORNode tree. Decentralized validation of blocks and public reproducibility of every security component became two different claims.

The base swap engine once carried THORFi Lending and Savers above it. At block 19,562,016 on 2025-01-24, nodes paused those programs and dollarized outstanding claims after the liabilities became unserviceable. The unwind did not make RUNE holders creditors. It minted 210 million TCY for affected claims and assigned staked TCY 10% of system income paid in RUNE.

That episode clarifies the token boundary better than a utility list. RUNE secures and settles the chain; TCY contains the explicit revenue mechanism arising from the default; LP and saver accounting carries separate withdrawal risk. A RUNE holder can benefit or suffer economically from protocol activity, but price exposure is not the same as an enforceable payment right.

RUNE began with 500 million at genesis, but burns and failed migrations made the headline increasingly misleading. ADR-023 removed about 64.9 million from the Reserve, left 9.3 million for operations and exploit coverage, and set `MaxRuneSupply` to 360,000,000. Published vesting is complete, block emissions are now minimal, and system-income burns can keep reducing the total.

The cap can still move through consensus software. Ordinary holders do not vote by token balance; active nodes change Mimir values and adopt releases, with about two-thirds support for most economic settings. v3.20 introduced experimental Stable Reserve code for eligible stable-to-stable fills outside RUNE pools, but it shipped disabled by default, with activation conditional on completed testing; this does not establish a currently available route. RUNE remains central, while the node set can redraw the paths around it.