THORChain November ’21 Network Shutdown Analysis

On 10th of November, THORChain entered a consensus halt. Nodes hit an exception and produced different states. The network stopped (as it is supposed to do). The network didn’t restart again until November 17th.

This is the not the first halting of THORChain network this year. Let’s take a look at the network data and if it has shaken investor confidence.

Data Analysis

Users upgrading to native RUNE

The number of users upgrading their BNB and ETH RUNE to native RUNE definitely seems to have gone down after the restart. We’re barely seeing more than 50 users doing this everyday.

Swap Analysis

Now let’s look at the swap data. Since RUNE is the native token of THORChain, the biggest indicator of drop in investor confidence would be if they were swapping OUT of RUNE to another asset. In this case, we do not see that. In fact, for about a week we see more users swapping TO RUNE after the restart!

Similar to the swapping TO RUNE, we also see a higher number of total swaps after the restart. The BNB.BUSD pool has seen the most activity after the restart.

Because of the increase in number of swaps, the amount swapped also saw a similar uptick after the restart.

The total swap fees don’t show a similar uptick post-restart but there are a couple of spikes around the end of November. These spikes are similar in magnitude to those before the restart.

The number of users swapping sees a decline post-restart. This is the first metric where we are seeing a decline post-restart. This suggests that the fewer number of users were doing a lot more swaps post-restart. This is why we saw a higher number of swaps post-restart.

LPs Analysis

Now, let’s look at the Liquidity Providers (LP) and how they’ve behaved post-restart.

There are two actions an LP can take — add or remove liquidity. Similar to swaps, a decrease in investor confidence will result in LPs removing liquidity.

Post-restart we see removed liquidity as the dominant action by the LPs. However, on closer analysis this is because the RUNE Liquidity Cap has been reached and the caps have not been raised! Therefore, a lot of users who might have added liquidity have been forced to sit on the sidelines.

With the caps hitting a limit, we’ve seen a reduction in the number of LPs post-restart.

Conclusion

A halt in the network and trading activity is a major interruption. A similar incident in Solana’s network earlier this year was not received well within the community. As a result SOL price fell for a few days.

Fornuately for THORChain, it’s community seems to be really passionate and believes in the mission and utility provided by THORChain. As the THORChain team put it:

THORChain is embryonic software and the bugs are being found & fixed in real-time. THORChain is in “chaosnet” for a reason — it’s not possible to find all the bugs in a testnet.

This seems to have resonated with the community and investors and we don’t see a major decline on any metric post-restart of the THORChain network.