Crypto is unregulated in the UK; there's no consumer protection; value can rise or fall; tax on profits may apply*.
Thorchain (RUNE): How it works and where to buy it
Learn more about how Thorchain works, why the RUNE token is useful and where to buy it.
Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
- The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
- The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong
- The Financial Services Compensation Scheme (FSCS) doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime – in other words, this type of investment isn't recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker.
- The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You may not be able to sell your investment when you want to
- There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
- Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
4. Cryptoasset investments can be complex
- Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
- You should do your own research before investing. If something sounds too good to be true, it probably is.
5. Don't put all your eggs in one basket
- Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCA's website here.
For further information about cryptoassets, visit the FCA's website here.
A step-by-step guide to buying RUNE
Want to buy Rune? Follow these simple steps to get involved with the Thorchain network:
Step 1. Create an account on a cryptocurrency exchange that allows you to trade RUNE
Compare a list of exchanges that support RUNE. Depending on the exchange you choose, RUNE can be traded with Australian dollars (AUD), Bitcoin (BTC), Ethereum (ETH) or a different crypto. You’ll need to provide your email address and create a password to register for an account, while it’s also recommended that you set up two-factor authentication to provide an extra level of security.
Step 2. Deposit funds into your account
Many cryptocurrency exchanges only allow trading between cryptocurrencies and don’t allow the direct deposit of fiat currency, such as AUD, so you may need to own or buy BTC or ETH first.
The exact process for depositing funds into your account varies depending on the exchange you choose.
Step 3. Buying RUNE
The final step is to trade your chosen currency for RUNE on the exchange. Once again, the exact process you need to follow may vary slightly depending on the exchange you choose.
Where to buy RUNE
Crypto is unregulated in the UK; there's no consumer protection; value can rise or fall; tax on profits may apply*.
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What is DeFi? Read the beginner’s guide
How does Thorchain work?
Thorchain’s goal is simple: build bridges to enable anyone to securely and cheaply move any assets between any blockchains.
Although similar to other cross-chain compatibility systems, such as wrapped Bitcoin (wBTC), Thorchain aims to enable the movement of the assets themselves on their home chains.
The first part of Thorchain’s solution is liquidity pools, all of which are composed of RUNE tokens in combination with other assets.
These pools serve as the source of all the different swappable coins from different blockchains, while the RUNE token acts as an intermediary currency to allow swapping between any two supported assets. Basically, whenever an end user wants to swap an asset from one blockchain to another, they’re making a trade through these pools.
In addition to providing the liquidity necessary for the system to work, Thorchain also uses its liquidity pools for pricing data, under the assumption that any discrepancies between its liquidity pools and other markets will be arbitraged out quickly.
The other part of Thorchain’s solution is the nodes, whose job it is to provide security to the network, to build bridges to all the different supported blockchains and to ensure that all transactions are broadcast to the appropriate chains.
Basically, the nodes all keep one eye on the liquidity pools and another eye on the supported blockchains. When someone makes a cross-chain transaction using the liquidity pools, the nodes see it happen and then perform the actual on-chain transactions on the user’s behalf.
Nodes are theoretically kept honest through their staking of RUNE tokens, so the system can act as a convenient one-stop shop for someone’s cross-chain transfer needs.
What does the RUNE token do
The RUNE token serves two key purposes in the Thorchain network:
- The token is found in all Thorchain liquidity pools, to create an intermediary asset for use across all of them, greasing the wheels for transfers.
- It acts as an incentive and penalty mechanism, helping ensure that nodes are honest in their behaviour and their reporting of transactions on different chains.
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.
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