Key Insights
THORChain’s Ecosystem expanded with eight new frontend interface integrations (wallets, exchanges, and various services). Li.Fi, Cake Wallet, and Zengo Wallet were among some of the interfaces that added support for THORChain swaps.THORChain’s TVL declined by 44.9% QoQ from $472 million to $260 million. This decline was primarily due to a market-wide downturn, which led to a 49.5% decrease in RUNE’s price, which makes up approximately 50% of their TVL.Swappers remained resilient, falling only 6.7% QoQ despite a 30.9% fall in average daily volume. Swappers decreased from an average of 1,700 swappers per day in Q1 to 1,600 in Q2, but the average daily volume decreased from $218 million to $151 million. Six Architecture Decision Records (ADRs) were passed and implemented. These ADRs helped to reduce risk and liabilities to RUNE tokenholders and the network as well as strengthen long-term growth through project team funding.
Primer
THORChain (RUNE) is a Layer-1 network designed to facilitate cross-chain DEX swaps without the need for wrapped assets (i.e. Swap native BTC for native ETH). The blockchain is developed on the Cosmos SDK and utilizes BFT Tendermint consensus engine. Native assets are managed directly in onchain vaults and funds are secured by nodes bonding or staking RUNE, the native token of THORChain.
The network employs a Threshold Signature Schemes (TSS) requiring a two-thirds majority of nodes for the movement of funds to and from vaults. Each vault must have a RUNE bond worth more than 1.5 times the value of the vault’s funds to ensure they do not collude to steal funds.
THORChain uses continuous liquidity pools (CLP) where all pools are paired with RUNE and provide consistent liquidity to all assets in the network. Furthermore, fees are adjusted according to the liquidity depth of the pool. Additionally, THORChain provides a Savings Product for yield on synthetic assets (synths) and a Lending Product for overcollateralized, 0% interest loans with no liquidations or expiration.
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Key Metrics
Performance Analysis
Market Cap and Fees
Over the quarter, 2.9 million RUNE (0.7% of total supply) were net burned, a 54% QoQ decrease. RUNE is primarily burned by the lending product where collateral supplied to the lending product is converted to RUNE and burned. Overall, over 86.4 million RUNE has been net burned, reducing RUNE’s current token supply from 485 million tokens to 414 million.
Token emissions to node operators and liquidity providers (LPs) come from the protocol-owned Reserve Module which controls ~76.4 million RUNE (18% of the current supply). Another 31% of RUNE’s total supply is held in the Staking Bond Module and the liquidity pool module.
Total liquidity fees (swap fees, outbound fees, and saver fees) decreased by 37.3% QoQ from $8.6 million in Q1 to $5.4 million in Q2 primarily due to a drop in volume, which was reflective of the broader market downturn. Liquidity fees include:
Swap Fees – Depend on liquidity pool depth, with greater liquidity resulting in lower fees, and trade size, with larger trades incurring higher fees. Outbound Fees – Cover the cost of gas to withdraw liquidity from pools. These fees are calculated as the external blockchain’s “fast fee” multiplied by 1.5 to 3. This multiplier was recently adjusted to be specific to each blockchain.
Of note, Network Fees (0.02 RUNE per transaction) for settling on the THORChain Network are not included in the chart above. In addition to emissions, these fees are distributed between node operators and LPs based on the total bonded (e.g., staked) and TVL using the Incentive Pendulum logic.
Synthetic Assets and TVL Breakdown
After increasing 43.7% last quarter, TVL in THORChain pools decreased 44.9% from $472.3 million to $260.2 million in Q2, joining the downtrend experienced by several protocols during this time.
THORChain pools always pair an asset (e.g., BTC) against RUNE. The BTC-RUNE pool TVL can be broken down into synths TVL, savers TVL, and other TVL.
Synthetic assets (Synths), paired with RUNE in liquidity pools, are collateralized 50% by the underlying asset (e.g., BTC) and 50% by RUNE. Synths are designed to peg to the value of the underlying asset. When RUNE’s price fluctuates, internal accounting mechanisms repeg the synth by adjusting the asset ratio, putting non-synth liquidity providers (LPs) in a leveraged long position on RUNE if the price of RUNE rises.
In April 2024, ADR-014 reduced the percentage of a pool that can consist of synths (i.e., the maximum synth utilization) from 60% to 50%. This change aimed to reduce risk for LPs by preventing overleveraging.
Q2 saw Synth TVL drop 75.4%, while saver vault TVL decreased 29.8%. The decline was driven by the introduction of “trade assets,” a new asset class with lower fees, attracting synth traders and easing pressure on LPs.
By the end of Q2, $130 million of RUNE was paired with external assets in liquidity pools. The remaining TVL primarily represents the RUNE portion in dual liquidity pools, which fell 48.5% in line with RUNE’s price decrease.
Saver vaults held $92.6 million in TVL, down 29.8% from the previous quarter, while synthetic BTC’s market share of TVL rose to 47% despite a 24.4% TVL decline. BTC Saver’s APR also fell from 1.15% over the past 180 days to 0.65% over the past 90 days. Both ETH and BCH saw similar declines in TVL and APR, likely due to lower trading volumes and increased synth utilization. These declines in APR could be in-part due to declines in volume and increased synth utilization (from ADR-014 and RUNE’s decline as a portion of TVL).
Affiliate Revenue
THORChain users typically interact with exchanges, wallets, or custodial services to broadcast transactions, rather than directly engaging with THORNodes. To incentivize these integrations, THORChain allows wallet developers to include an affiliate address and a custom fee rate. The protocol then collects these affiliate fees in a non-custodial and transparent manner for every transaction processed via a front end that includes an affiliate address.
Even amidst a broader market decline, THORChain’s affiliate fees have shown resilience. During Q2, the protocol generated an average of over $43,000 per day in affiliate revenue, reflecting the continued demand for seamless integrations and cross-chain services. This steady affiliate activity highlights the growing utility of THORChain’s ecosystem and the ongoing value it provides to third-party platforms.
In addition, a total of $1.9 billion of volume was swapped through affiliate platforms in Q2, with a weekly average of $153.5 million, further confirming the steady demand for THORChain swaps.
Volume
Avg daily trading volume fell 30.9% QoQ to $150.9 million. THOR continued to drive volume, with $113.0 million in Q2 average daily volume, down 1% QoQ. Among external assets, ETH and BTC constituted the majority of volume, with 22.1% of swapped volume appearing to concentrate primarily on Ethereum and Bitcoin. ETH and tokens on the Ethereum network remained the most swapped external assets averaging $18.2 million per day. Despite a decline of 26.1% in volume over the quarter, Ethereum’s market share of all swapped assets increased by 7.1%. Bitcoin also saw increases in market share of 5.3% despite declines in volume of 27.3%.
Swappers and Swaps
Swaps fell 23.2% QoQ from an average of 40,000 swaps per day in Q1 to 31,000 in Q2. However, swappers remained resilient, falling only 6.7% QoQ from an average of 1,700 swappers per day in Q1 to 1,600 swappers in Q2, illustrating the demand for cross-chain swaps.
Key Developments
Architecture Decision Record (ADR) Updates
ADR-013 adopted; Merged April 11, 2024; Savers will be forcibly ejected and have their liquidity returned when synth utilization grows beyond a certain threshold (currently 50% of the pool depth). Savers are ejected on a last-in-first-out basis.ADR-014 adopted; Merged April 4, 2024; Savers will not receive yield on pools where synth utilization is over 50% (above which POL currently deposits).ADR-015 adopted; Merged July 9, 2024; Binance Beacon Chain was phased out and THORChain departed. With this departure, all synths were burned and effectively converted to RUNE which got transferred to the Reserve. This ADR would refund 24,192.83 RUNE to 46 addresses which held synths that were burned.ADR-016 adopted; Merged July 8, 2024; Swaps conducted through frontends that charge affiliate fees will incur an additional fee, set at 12% of the affiliate fee, payable to the protocol. For instance, if an affiliate charges 20 basis points (bps), the additional protocol fee would be approximately 2 bps (12% of 20 bps), which will be directed to the protocol.ADR-017 adopted; Merged June 19, 2024; Burn 1bps (1/10000) of the system’s income.ADR-018 adopted; Merged July 16, 2024; 5% of System Income (prior to being split to Nodes and LPs) should be paid into a certain address (nominated and upgradable by ADRs) for the purpose of funding the Core Protocol Team, currently Nine Realms.
Other Notable Updates
New Frontend Integrations; Eight new frontend interfaces (wallets, exchanges, and various services) added support for THORChain swaps, including Li.Fi, Cake Wallet, Zengo Wallet. Fireblocks also added multi-party computation (MPC) for RUNE wallets. Trade Account / Assets; Launched June 10, 2024, trade Assets are a new asset type issued on THORChain, backed 1:1 by native assets and custodied within THORChain’s vaults but not in liquidity pools. Traders only pay THORChain’s $0.2 fees when swapping, avoiding L1 fees, making them efficient for arbitrage. By the end of Q2, trade asset TVL reached $14.1 million. More information on Trade Assets can be found here.Router Contract Whitelist Removal; After a Code4rena audit, THORChain removed the whitelist requirement for inbound swaps on EVM chains. Now, smart contracts and Smart Contract Wallets can directly interact with the Router, enhancing integration and SwapIn aggregation.Lending Affiliates; Frontend Interfaces (wallets, exchanges, and various services) can now charge an affiliate fee when creating a THORChain loan.Simulation Tests; A new testing framework has been developed to simulate activity on external chains and the state of THORChain itself. Since THORChain’s state is influenced by actions on external chains, this new approach will replace smoke tests with a more maintainable and extensible testing suite.Manual Observation Tooling; new tools were introduced for node operators to manually monitor transactions on external chains. This enhancement will streamline the process for node operators to issue refunds for transactions that were not observed.Per-Asset Dynamic Outbound Fees; Outbound fees, which are charged to cover the gas costs for moving liquidity off the network, have been updated. The multiplier for these outbound fees is now determined on a per-asset basis. This means that different assets will have varying outbound fee multipliers, better reflecting the actual costs of sending each asset onchain.
Closing Summary
In Q2 2024, THORChain’s market cap decreased by 52.2% to $1.4 billion, and its TVL dropped by 44.9% primarily due to RUNE’s price volatility. Despite a decline in TVL and volume, the number of active swappers remained relatively stable in Q2. Additionally, six Architecture Decision Records (ADRs) were passed and implemented. Notable ADRs include the implementation of a mechanism to limit utilization beyond 50% and the introduction of funding for the Core Protocol Team, helping to strengthen the long-term development of THORChain.
In Q2 2024, THORChain’s market cap decreased by 52.2% to $1.4 billion, and its TVL dropped by 44.9% primarily due to RUNE’s price volatility. Despite a decline in TVL and volume, the number of active swappers remained relatively stable in Q2. Additionally, six Architecture Decision Records (ADRs) were passed and implemented. Notable ADRs include the implementation of a mechanism to limit utilization beyond 50% and the introduction of funding for the Core Protocol Team, helping to strengthen the long-term development of THORChain.
Amazon.com: Its Role in the U.S. Industry
Introduction
Amazon.com, often simply referred to as Amazon, has transformed from an online bookstore into a colossal global conglomerate that has fundamentally altered the landscape of retail, technology, and numerous other industries. Founded in 1994 by Jeff Bezos, Amazon’s rapid growth and diversification have made it a central player in the U.S. economy. Its impact is felt across various sectors, including e-commerce, logistics, cloud computing, entertainment, and even artificial intelligence. This article explores Amazon’s role in the U.S. industry, examining its influence, achievements, and the challenges it faces.
The Rise of Amazon.com
Origins and Early Growth
Amazon began as an online bookstore in Bezos’s garage in Bellevue, Washington. The vision was simple but revolutionary: to create an online platform where people could buy books. Bezos recognized the potential of the internet to disrupt traditional retail and chose books as his starting point due to their wide appeal and ease of distribution. By offering a vast selection and competitive prices, Amazon quickly gained a foothold in the market.
The company’s initial public offering (IPO) in 1997 marked the beginning of its journey toward becoming a dominant player in the U.S. and global markets. Amazon’s early success was driven by its focus on customer satisfaction, an extensive inventory, and a commitment to fast and reliable delivery. This focus laid the foundation for its expansion into other product categories and services.
Diversification and Expansion
Amazon’s diversification strategy began with the introduction of new product categories, such as electronics, toys, and apparel. This move positioned Amazon as a one-stop shop for consumers, significantly expanding its customer base. The company also introduced its marketplace platform, allowing third-party sellers to offer their products alongside Amazon’s own inventory. This not only increased the variety of products available but also created a new revenue stream for the company through commissions on sales.
One of the most significant milestones in Amazon’s diversification was the launch of Amazon Web Services (AWS) in 2006. AWS provided cloud computing services to businesses, enabling them to rent computing power and storage rather than investing in expensive infrastructure. This service quickly became a cornerstone of Amazon’s business, contributing significantly to its profitability and establishing Amazon as a leader in the tech industry.
Amazon’s Role in E-Commerce
Transforming Retail
Amazon’s impact on the retail industry cannot be overstated. It has revolutionized the way consumers shop, shifting much of retail activity from brick-and-mortar stores to online platforms. The convenience of shopping from home, coupled with Amazon’s vast selection and competitive pricing, has led to a fundamental change in consumer behavior. This shift has forced traditional retailers to adapt, leading to the rise of omnichannel strategies that integrate online and offline sales.
The concept of “one-click shopping,” patented by Amazon in 1999, further streamlined the online shopping experience. This innovation reduced the friction in the purchasing process, contributing to higher conversion rates and reinforcing Amazon’s dominance in e-commerce. Additionally, Amazon Prime, launched in 2005, offered customers free two-day shipping and other benefits for an annual fee, further solidifying customer loyalty and increasing the frequency of purchases.
Impact on Small Businesses
While Amazon has provided opportunities for small businesses through its marketplace platform, it has also posed challenges. On the one hand, small businesses gain access to a vast customer base and the logistics infrastructure that Amazon offers. On the other hand, they face intense competition, not only from other third-party sellers but also from Amazon itself. The company’s ability to undercut prices and its control over the marketplace platform have led to concerns about fairness and market power.
Moreover, Amazon’s algorithms and data-driven approach to retail have raised questions about the transparency of how products are promoted and priced on the platform. Small businesses often struggle to achieve visibility without spending on Amazon’s advertising services, which can be costly. Despite these challenges, many small businesses continue to rely on Amazon as a vital sales channel, underscoring its central role in the U.S. retail industry.
Amazon in the Logistics and Supply Chain Industry
Revolutionizing Logistics
Amazon’s impact extends beyond retail into logistics and supply chain management. To fulfill its promise of fast and reliable delivery, Amazon has invested heavily in building a sophisticated logistics network. This network includes a vast network of fulfillment centers, advanced robotics, and a growing fleet of delivery vehicles, including drones.
Amazon’s logistics capabilities have set new standards for the industry. The company has pushed the boundaries of what is possible in terms of speed and efficiency, challenging traditional logistics providers like FedEx and UPS. Amazon’s commitment to customer satisfaction has driven innovations such as same-day and even one-hour delivery in select areas, further raising consumer expectations.
In-House Logistics Services
In recent years, Amazon has taken steps to reduce its reliance on third-party logistics providers by expanding its in-house delivery capabilities. The launch of Amazon Logistics, a service that uses independent contractors to deliver packages, is a testament to this strategy. This move has enabled Amazon to exert greater control over the delivery process and reduce costs.
However, this expansion has not been without controversy. Amazon’s use of independent contractors has sparked debates about labor practices and the gig economy. Critics argue that Amazon’s business model places financial and physical burdens on its delivery drivers, who are often classified as independent contractors rather than employees. This classification exempts Amazon from providing benefits and protections typically afforded to employees, such as health insurance and minimum wage guarantees.
Amazon Web Services: The Backbone of the Internet
Dominating Cloud Computing
Amazon Web Services (AWS) has emerged as one of the most significant contributors to Amazon’s success. As the leading provider of cloud computing services, AWS powers a vast portion of the internet, supporting everything from startups to large enterprises. Its services include computing power, storage, databases, machine learning, and more.
AWS’s dominance in cloud computing has had a profound impact on the tech industry. By providing scalable and cost-effective solutions, AWS has lowered the barriers to entry for new businesses, fostering innovation and entrepreneurship. Companies no longer need to invest heavily in physical infrastructure; instead, they can rent the necessary resources on demand from AWS.
Economic Impact and Innovation
The success of AWS has not only boosted Amazon’s financial performance but also contributed to the broader U.S. economy. AWS has created jobs, driven innovation, and supported the growth of numerous tech companies. Its services have become integral to the operations of many businesses, from streaming services like Netflix to financial institutions and government agencies.
AWS’s role in advancing technologies such as artificial intelligence and machine learning has also been significant. By making these technologies accessible through cloud services, AWS has enabled companies to develop new applications and services that were previously out of reach. This has spurred growth in sectors such as healthcare, finance, and entertainment.
Amazon’s Influence on Entertainment and Media
Amazon Studios and Prime Video
Amazon’s foray into the entertainment industry began with the launch of Amazon Studios and Prime Video. These platforms have become key players in the streaming wars, competing with giants like Netflix, Disney+, and HBO Max. Amazon Studios produces original content, including critically acclaimed series like The Marvelous Mrs. Maisel and The Boys, as well as feature films.
Prime Video, available as part of the Amazon Prime membership, has become a major driver of subscriber growth. By offering a mix of original content and licensed programming, Amazon has been able to attract a diverse audience. The company’s investment in high-quality content has not only boosted its streaming service but also positioned it as a significant player in Hollywood.
Impact on the Publishing Industry
Amazon’s origins as an online bookstore continue to influence the publishing industry. The company has become the largest bookseller in the world, both in physical books and e-books. The Kindle, Amazon’s e-reader, revolutionized the way people consume books, making digital reading mainstream.
However, Amazon’s dominance in the book market has raised concerns among publishers and authors. The company’s pricing strategies and negotiation tactics have led to disputes over revenue sharing and control. Amazon’s influence over the publishing industry extends to self-publishing, where its Kindle Direct Publishing platform allows authors to bypass traditional publishers and reach readers directly. While this has democratized publishing, it has also led to an oversaturation of the market and challenges in quality control.
Challenges and Criticisms
Regulatory Scrutiny
Amazon’s immense size and influence have made it a target for regulatory scrutiny. In the U.S. and abroad, lawmakers and regulators have raised concerns about the company’s market power, labor practices, and treatment of third-party sellers. Antitrust investigations have been launched to determine whether Amazon engages in anti-competitive behavior, such as favoring its own products over those of third-party sellers on its platform.
The company’s expansion into various industries has also led to concerns about its dominance and potential to stifle competition. Critics argue that Amazon’s control over data, logistics, and retail gives it an unfair advantage, making it difficult for smaller companies to compete. In response, there have been calls for greater regulation and even the potential breakup of Amazon into smaller entities.
Labor Practices and Workers’ Rights
Amazon’s labor practices have come under intense scrutiny, particularly in its fulfillment centers and delivery network. Reports of grueling working conditions, high injury rates, and inadequate breaks have sparked widespread criticism. Workers have organized protests and strikes, demanding better pay, safer working conditions, and the right to unionize.
The company’s use of technology to monitor and manage workers has also raised ethical concerns. Amazon’s reliance on algorithms to track productivity and enforce performance targets has been criticized for creating a dehumanizing work environment. The company’s resistance to unionization efforts has further fueled debates about workers’ rights and corporate responsibility.
Environmental Impact
As one of the largest companies in the world, Amazon’s environmental impact is significant. The company’s vast logistics network and rapid delivery services contribute to carbon emissions and packaging waste. Amazon has faced criticism for its role in driving consumerism and its contribution to environmental degradation.
In response, Amazon has pledged to become more sustainable. The company launched the Climate Pledge in 2019, committing to reach net-zero carbon emissions by 2040. Amazon has also invested in renewable energy, electric delivery vehicles, and sustainable packaging. While these efforts are a step in the right direction, critics argue that more needs to be done to address the environmental impact of the company’s operations.
