THORSwap Liquidity Providing Explained

Kylin Network
5 min readMay 26, 2021


Dear Kylians.

Kylin Network launched their token KYL on March5th, 2021 on the Decentralized Exchange (DEX) Uniswap. Kylin aims to advance to a Decentralized Autonomous Organization (DAO) within 4 years. Mainnet will go live in Q3 2021 and with that token holders will be able to make passive income on their KYL-holdings by participating in either Validating or Nominating.

After feedback from the community, the team started exploring new ways to give further access and incentives through new marketplaces and provided these already through their partner MantraDAO but kept their eyes and ears open for more opportunities. Since we are closely following THORChain, which is building their native asset cross-chain DEX and recently launched their multi-chain chaosnet (MCCN), we seized the opportunity as soon as it opened up and we managed to get KYL live for trading on THORSwap.

This platform provides you with the possibility to swap KYL versus (soon) almost every other cryptocurrency asset without going through the process of wrapping. THORSwap provides P2P native swaps and will also enabled you to earn further passive income on your KYL-holdings by providing liquidity to the KYL/RUNE asset pool and it brings you an all in one decentralized marketplace.

THORSwap Liquidity Pools

This all sounds really cool, but how does it actually work? In this article we will explain to you how the THORSwap platform works…

Before we start providing liquidity you’ll need to understand how THORSWap works. The platform provides users with liquidity pools, each pool is filled with one crypto asset (BTC, KYL, LTC, BNB, USDT…) that is paired with THORChain’s native token RUNE that is used for bonding the pool. The platform is run by the THORChain community (true decentralization) and it’s being build up step by step.

Every couple of days they ‘Raise the caps’, this means more room to provide liquidity on the platform opens up. This also provides a opportunity for new projects to enter and provide liquidity in the ‘Pending’ pools. The project that manages to provide the most liquidity will be activated after a couple of days and is integrated in THORSwap. Kylin Network is very happy and proud that we managed to pull this off within a week and being ranked as number 10 behind big players such as BTC, ETH, LTC, USDC, BNB, USDT!

The THORSwap system works in a way that as soon as 90% of the total amount of available liquidity is provided, the pools are filled and you can not provide any more liquidity (on the dashboard this shows as ‘Funds Cap’) This means you’ll have to wait until someone else takes out liquidity (this could be on any asset available and happens pretty often) or when the THORChain community raises the caps again.

Since RUNE is used for bonding, all pools will be filled 50/50. So if we provide liquidity we will use the KYL/RUNE pool which will also be filled 50/50. This means that if you want to provide liquidity with only KYL tokens that hold a value of, let’s say(at that moment) $200 the platform will automatically convert for $100 worth of tokens into RUNE. From that point you are providing liquidity and will share in the profits that come with that. The APY is flexible and still increasing. When KYL got activated the APY started with 4% but increased to more than 17% within 4 days.

The pools being filled 50/50 means that it is hard to say how the two assets will perform. For instance if someone else pulls out their KYL tokens your KYL holdings will increase and RUNE decrease. When KYL price rises harder compared to the price of RUNE your RUNE holding will increase. The pool is constantly balancing the 2 assets to keep them alligned. This also means it is possible for you to gain KYL, but loose RUNE and vice versa. That is why we advice to start with small amounts first and get a feeling on how this works.

Impermanent Loss

Providing Liquidity comes with the risk of impermanent loss which basically means that after a period of time it is possible you would have gained more by just holding your tokens over what you’ve gained by providing liquidity. Fortunately for us the market is growing fast and the platform provides an insurance that will cover any impermanent loss. For every day you provide liquidity you will ‘earn’ 1% of impermanent loss protection meaning after 100 days you will be fully covered.

A Handy Guide to the THORChain Integration

The Kylin Network team provided a article with all the links you need to enter and use THORSwap. It is good to know the wallet connect feature for Metamask has already gone live and it won’t be long until Ledger and TrustWallet will be useable as well.

About Kylin

Kylin Network aims to build a cross-chain platform powering the data economy on Polkadot. It will be the data infrastructure for the future DeFi and Web 3.0 powered by Polkadot. Kylin Network will provide valid, reliable, secure, cost-effective, and easily-coordinated data sources and data analytics.

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Kylin Network

Building a Cross-chain Platform Powering the Data Economy on Polkadot