Thorchain you had me at decentralized cross-chain liquidity protocol, leaderless vault manager and resistant to centralization. I have some Layer 1 blockchains that are just sitting stagnant time to put them to use, now I just assumed that the APYs listed would earn me the Rune token passively. However that was not the case with a Asymmetrical deposit into a pool.
When you deposit a Layer 1 Blockchain like Bitcoin Cash into the protocol it divides your initial deposit in half and buys the Rune token to equal the divided half your BCH. The amount of Rune tokens 4.568 is equal to the BCH coins 0.1368447.
This is the ideal scenario that you want played out as you withdraw your liquidity. Your BCH is depreciating in value and at the same time the Rune token is appreciating. Now your Rune tokens within the pool are worth more when the protocol converts your share of the pool back to BCH the converted value will trade more BCH because you still have 4.568 worth $13.00 each converted back to BCH at lower evaluation of $374.00 each gains you overall profit on your initial deposit.
Now what you don't want is Impermanent Loss if the price of your assets diverge in price, bots will balance the pool through Arbitage profiting off the price difference that comes out of the pockets of Liquidity Providers. Here your Rune tokens are worth less and if you pull your liquidity at this point: 4.568 Rune at $10.92 each trades for less BCH = 0.119912 because of the higher evaluation of BCH resulting in a net loss.
Thorchain incentives providing liquidity by providing Impermanent Loss Protection at 1% for each day you provide liquidity, 49% for 49 days and 100% protection for 100 days. If the Impermanent Loss is greater than the fees and incentives from providing Liquidity then Thorchain will subsidize the difference.Which means in the above example if my share % of the Pool fees are 0.0023 and the average Pool fees for BCH/Rune at $200 a day. At the end of the 100 days of providing liquidity if I earn 0.46 x 90 day = $41.4 / $415.97 = 0.09952 My loss would be initial deposit 0.27336894 - 0.2567567 = 0.1661224 Thorchain would provide me the difference of 0.1661224 - 0.09952 = 0.08290776 ($34.49) withdrawn from the BCH/Rune Pool in BCH and resupplied with the equivalent Rune from the Node Providers.
Now after I realized that I donated enough to the protocol I decided to make a swap before I left. One of the reasons I need to make micro swaps is because of Pub0x tips but all was not right in the Bifrost.
It was actually user error on my part I'm used of making swaps on 1inch, Sushiswap and Uniswap on mainnet so when the transaction icon kept spinning I started to panic. But the protocol has to first confirm the transaction on the BCH blockchain which takes 2 or more hours in my experience (If the trade-off is negligible transfer fees and the speed of a tortoise then sign me up for the Turtle blockcain). Then the BNB is pulled from the BNB/Rune pool and transferred to my account.
Now I'm dead tired at this point I just want my coins and off to bed with me. I transfer the BNB first and to the best of my knowledge the full amount of the BCH, relieved and tired I don't wait for the confirmation but go to bed. In the morning the exact amount of BNB sent is the same as the BCH that is transferred to my wallet, odd I could've sworn I sent the full amount and I DID TOO because a micro payment like that would've required the mental capacity I didn't have at the time. Then the protocol wouldn't let me withdraw the remaining balance until I changed the withdrawal slider to 99% which the transaction did go through but I had to come back for 1%. Decentralization at the price of convenience.
