ThorChain

ThorChain is a layer 1 blockchains that aims to provide the ability to natively swap assets across chains

without ever having to give up the custodity over your own wallet. It does so by having its Nodes connect to each supported blockchain, besides ThorChain, namely: Bitcoin, Ethereum, Litecoin, Dogecoin, Cosmos, Binace Coin, Bitcoin Cash.

ThorChains native token is RUNE, it is used for transaction fees, one side of each supported liquidity pool

as well as a security anchor for funds deposited into ThorChain (e.g. liquidity deposits).

The Issue

As described above ThorChain is closely connected to 7 other blockchains, each coming with its own set of unique features, services and implementation details.

Writing software for ThorChain therefore also usually has to support some of those remote blockchains in order for the cross-chain nature to be of any use.

When comparing this to other chains the complexity is a lot higher. Moreover ThorChain connects or disconnects from other blockchains from time to time putting even more pressure on developers.

The Solution

Instead of incentivizing specific developers or projects the decision was made to implement a sort of affiliate marketing model.

Developers can get paid for attracting users and having them use their platform: There is a clear incentive in mind when developing for ThorChain.

On a technical level this works by having platforms add a message to transactions that tells the validators to send some of the transaction value to the developer as affiliate fee.

You can read more about that mechanism here:

Methodology

Swaps

In flipside the memo is already parsed down for the swaps table.

It can be accessed using the

affiliate_address and affiliate_fee_basis_points columns.

Liquidity Additions

Sadly the memo is not parsed and not even accessible using the flipside tables. But there is another way to identify affiliate fees within liquidity additions.

Every time a user deposits funds into a liquidity pool and an affiliate fee is attached then the affiliate address will automatically open a liquidity position in the same pool and even in the same transaction as the user deposit.

Therefore if 2 liquidity additions are done in the same transaction, one coming from a non affiliate address and one coming from a affiliate address we can say with high certainty that this is due to affiliate fees being charged!

Transaction Memos

In ThorChain each transaction can have a Memo that contains what the transaction is supposed to do.

Apart from the primary action (like swapping, adding liquidity etc.) there also are optional parameters.

One of which is the affiliate fee. It is just appended to the end in this format:

::

The base value is a number between 0 and 1000, representing 0 to 10% fee.

Note: The fee can only be added to swaps and liquidity deposits. It will be ignored if applied to any other transaction type.==

Findings

• The amount of swap fee collected is just about $1M at the time of writing.

  While this might not appear like much comparing it to other elements within ThorChain you should not forget that 1$M is still a ton of money!

• All those fees have been sent to 37 distinct addresses.

  Given that each represents a platform / wallet implementing ThorChain its quite a lot actually.

• The vast majority of all affiliate fees come from swaps.

=> In the following sections we will primarily look at the fees collected from swaps!

Swap Affiliate Fee Breakdown

Time to take a closer look at the 95% of fees collected in swaps.

Important metrics are:

• Amount of fees collected over time

• Affiliate fee per affiliate address & their respective fee “percentage”

• Popularity of different fee “percentages”

• Correlation between swap amount (in one transaction) and the fee “percentage”

Note:

==Only affiliates that collected at least 100$ will be shown seperately!==

Liquidity Deposit Affiliate Fee Breakdown

While these fees only account for 5% of all collected fees its still $40k so why not also take a look at this.

The core metrics are:

• Amount of fees collected over time
• Fee distribution amongst affiliates

Findings

While there are 37 affiliates, only

• 8 of them reached 100$ …
• 7 of them reached 5.000$ …
• 2 of them reached 100.000$ …

… of total swap fees collected

The top 3 affiliates are the well known services

1. ThorSwap
2. THORWallet
3. Defispot

Correlation TX Value & Fee Percentage

Note:

As seen above only THORWallet does charge a non-constant fee percentage, therefore this graph will only show THORWallet data.

This graph looks quite complicated at first, so let me break it down for you:

X-Axis:

The X-Axis shows the transaction value.

Each category is a range with a width of 1500$.

Category 0 is 0$ - 1500$

Category 1 is 1500$ - 3000$

…

and so on

Y-Axis:

This just shows the fee base value as described above.

In the previous graph you could see a bar at

10 - 0.1%

30 - 0.3%

100 - 1%

These values appear here again.

Color:

This represents the amount of transactions within a certain category. Its scaled logarithmically meaning that

Orange (3) means 10x as many transactions as Blue (1)

Marker Size:

This reflects the total transaction volume within this category. This also does not scale linearilly but uses the square root of the volume to keep everything in around the same size range.

As expected you see high markers where there are many transactions as well as where there is a huge transaction value.

Findings

• Those most common fee basis point value across all tx values is 100
• While each fee basis point does not represent a certain range of tx values you can see some correlation between them
• Both the 10 and 30 base point mark have a upper limit that the transaction value can have before being moved up
  • Category 10 for bp 10
  • Category 37 for bp 30
• While there are still quite a few bp 30 transaction there are only very few bp 10 ones

Summing Up

No, its not time to conclude yet!

I mean it literally:

Time to sum up the previous results regarding affiliate fees from swaps and liquidity deposits.

This will give us some nice total statistics about affiliate fees.

That was a whole lot of information!

But don’t worry, I have summarized the most important points for you below:

Findings

• Affiliate fees are a way for ==developers to get paid== for the work they put into developing platforms / wallets for ThorChain
  • This is done by charging a fee on transactions on that platform
  • The fee can ==only be added to Swaps and Liquidity deposits==
• A total of ==$850K has been collected== so far at the time of writing
• The vast majority of all affiliate fees are collected from swaps
  • ==95% are swaps==
  • Only 5% are liquidity deposits
• While there are 37 distinct wallets that have received affiliate fees only 2 did manage to gather a decent volume
  • ThorSwap (65% of all fees)
  • THORWallet (30% of all fees)
• The fees charged on the most popular platforms are:
  • ThorSwap: 0.3% on swaps, 0% on liquidity deposits
  • THORWallet: 0.1% - 1% on swaps (depending on volume), >0% on liquidity deposits
  • DefiSpot: 0.4% on swaps, >0% on liquidity deposits

What you should take away:

When using a ThorChain related wallet or platform you should inform yourself about the affiliate fee charged on that platform

=> You can do so by looking at the transaction memo of a tx done with that platform on a ThorChain explorer.

About Me

Hey there 👋!

First of all, thanks for reading this all the way to the end.

I’m Playwo and currently studying computer science in germany.

Since joining Flipside in May I have created a lot of dashboard and visualizations just like this one!

I would appreciate if you check them out at:

Oh and follow me on twitter ♥

Findings

• ThorSwap first started to collect affiliate fees at the end of april 2022

  • Most of its collected fees are from May

    => Terra collapse likely the reason for that

• ThorWallet was one of the first services to charge affiliate fees
  • October 2021
  • Slow and steady fee collection since
• These 2 services make up for nearly 95% of all affiliate fees collected!

Findings

• ==ThorSwap does NOT charge a fee on liquidity deposits!==
• The second and third largest affiliates however do
  • THORWallet (95%)
  • Defispot (3%)

The other affiliates barely make for any volume / transaction counts

Note: For both: swaps and liquidity additions the refunded transactions must be ignored!