Thorchain liquidity pools and Ownership Through Pool Units
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Thorchain liquidity pools pair native assets with RUNE, and liquidity units record each provider's share of the changing pool balances. A liquidity provider (LP) contributes capital that swaps use, taking exposure to both sides of the pool. Their units track ownership, while trading, rewards, and later liquidity changes affect the assets backing that ownership. A deposit does not reserve the original token amounts for later withdrawal. Symmetric contributions supply both sides; asymmetric contributions supply one side while creating exposure to both. Reading a position therefore involves its units, the pool's total units, and its current balances. Withdrawal form, fees, and operating restrictions then determine what reaches the wallet.
Proportionate liquidity additions can reduce an existing position's ownership percentage while leaving its underlying value per unit unchanged.
RUNE Pairing and Changing Balances
RUNE pairs with each pool's external asset, connecting separate pools and giving each position exposure to the paired reserves. The balance ratio supplies an implicit pool price. That price can differ from external markets, creating opportunities for arbitrageurs to trade the difference. Their trades move the ratio toward market prices when the opportunity covers their costs. Equal value on both sides describes the pairing; it does not mean equal token quantities.
Native cross-chain swaps draw on these reserves, adding input assets and removing output assets through the pricing mechanism. Pool balances therefore describe available capital, not a record of each provider's original coins. A position's composition can change while its owner takes no action. The native assets remain on their respective blockchains, where network vaults hold them for protocol operations.
Liquidity Units and the Ownership Denominator
Liquidity units measure a proportional claim, so a position's percentage requires the pool's total units as its denominator. A provider's gross claim on each pool balance equals that balance multiplied by their liquidity units divided by total pool units. The calculation describes underlying ownership before withdrawal conversion, fees, and rounding. Units alone cannot identify the amount of either asset that belongs to a position.
Total pool units equal LP units plus synth units, which account for synthetic liabilities when those liabilities exist. Using only LP units as the denominator can overstate a provider's claim when synth units contribute to the total. Synthetic assets are no longer actively used within the protocol. Their historical accounting remains relevant when interpreting records that include synth fields, without making synthetic minting or redemption an available liquidity-entry method.
RUNEPool uses a separate ownership ledger for aggregate exposure to eligible protocol-owned liquidity positions. Its participants supply native RUNE and share the aggregate performance rather than selecting one asset pool. RUNEPool units therefore describe a different position from direct LP units. Its withdrawal rules also include a deposit-maturity condition. A RUNEPool unit count should never replace the direct pool denominator when calculating an individual LP's share.
Symmetric and Asymmetric Contributions
Symmetric contributions add equal value in RUNE and the paired asset, while asymmetric contributions add capital from one side. Both create exposure to the pool's underlying asset mix. An asset-only contribution does not preserve exclusive exposure to that asset. The unit allocation takes the contribution's effect on the existing pool into account. One-sided additions can incur slip, with the amount influenced by their size relative to pool depth.
Linked addresses let the protocol associate the two sides of a symmetric contribution. A contribution that expects a matching deposit can remain pending until the paired side arrives. That pending amount differs from liquidity that already has credited units. An unpaired, single-sided addition follows its own address rules. Deposit form consequently affects both the economics of entry and the addresses attached to the resulting position.
Can Your Units Stay Constant While Your Pool Share Changes?
A direct LP's units can remain constant while swaps change the backing balances or other liquidity additions change the ownership denominator. Ordinary swaps trade against existing liquidity without crediting new units to every provider. The position's asset quantities change because the reserves change. Rewards that increase pool balances can also increase the value behind an unchanged unit balance. Looking only for newly issued units would miss those changes.
Additional liquidity creates units alongside additional capital, so another provider's deposit can reduce an existing position's percentage. A smaller percentage does not automatically mean a smaller asset claim. Both numerator balances and the unit denominator matter. Properly proportioned new capital can leave value per unit unchanged, even though the ownership percentages shift. Withdrawals likewise remove capital and units together, rather than simply dividing the same reserves among fewer holders.
Swap Income and Unit Value
Pool performance reflects swap activity and any rewards that the network allocates to liquidity under its economic settings. The Incentive Pendulum adjusts rewards between node operators and liquidity providers as the balance between liquidity and bonded security changes. LP rewards can fall to zero when the pendulum's calculated security value does not exceed the liquidity value that needs protection. Reserve emissions depend on their own settings. Streaming swaps can change the fee income generated by a trade through smaller executions. Trading volume alone therefore does not establish a pool's return.
Protocol-owned liquidity adds capital that belongs to the protocol's own position. A configurable share of system income funds the protocol's position. The Liquidity Unit Value Index (LUVI) equals the square root of the product of asset depth and RUNE depth, divided by total pool units. An annualized rate derived from LUVI extrapolates a measured period. Its observation window and changing fee conditions affect that displayed rate.
A Pool Share Worked Through in Numbers
A direct LP's unit fraction determines its gross quantities of both assets, even though units and token balances use different measurements. Every changing quantity in this example is hypothetical. Assume a pool has 1,247,400 total units, including a position with 37,422 units. It holds 249,480 RUNE and 623.7 units of its paired native asset. The example assumes no synthetic liability and unchanged balances during the calculation.
The ownership fraction is 37,422 divided by 1,247,400, or 3%. Applying that fraction gives a gross claim of 7,484.4 RUNE and 18.711 units of the paired asset. The position's 37,422 liquidity units describe its share; they do not equal 37,422 RUNE or 37,422 asset units.
Those quantities represent underlying ownership before fees, rounding, or conversion into a single-asset payout. Changing either reserve changes the corresponding asset claim. Changing total units also changes the fraction unless the position's own units change proportionally. The arithmetic establishes a gross pool share, not the amount that a later transaction will deliver.
Reading the Position Record
A position record identifies credited liquidity separately from pending contributions, making it possible to distinguish ownership from an unfinished paired addition. THORNode exposes the position's units, associated addresses, pending amounts, and deposit-value fields. Midgard adds historical information about additions and withdrawals. These records serve different purposes: current state describes the position now, while historical totals describe capital that moved into or out of it.
Cumulative deposits do not equal present pool ownership after trading or earlier withdrawals. Likewise, a pending balance should not enter a pool-share calculation as though it already had credited units. Position units and pool totals need a consistent state and consistent numeric scaling. Otherwise, a calculation can mix historical contributions with current reserves and produce an apparent gain or loss that the ownership data does not support.
Partial Withdrawals and Single-Asset Payouts
Direct LP withdrawals redeem a selected fraction of the position, with symmetric and single-sided forms producing different payout compositions. The withdrawal fraction uses basis points, where 10,000 basis points represents the full position. A partial withdrawal reduces credited units and leaves the remaining share invested. Its remaining asset quantities continue to move with the pool. The requested fraction refers to ownership units, not a percentage of the original deposit amount.
A symmetric withdrawal returns the corresponding quantities from both sides. A single-sided withdrawal converts the claim toward the selected side, with slip-based liquidity fees affecting the payout. A position with only one recorded address withdraws to its original asset and address. A linked dual-address position can support both withdrawal forms, subject to applicable asymmetric-withdrawal restrictions. The position's recorded structure determines the available form.
Outbound costs reduce wallet receipts and can consume a substantial portion of a small claim. An external-chain payout's fee reflects destination-network costs and the protocol's dynamic outbound multiplier. The sending transaction has its own network fee. When the payout is a token rather than its chain's gas asset, the fee calculation converts the outbound cost into the payout asset.
Relative-Price Risk and Liquidity Restrictions
Relative-price movement changes an LP position's composition and can leave it worth less than separately holding the original contribution assets. Impermanent loss compares the pool share with holding its initial quantities of RUNE and the paired asset; it differs from simply asking whether the position gained value. Fee income can offset some or all of the difference, but the relationship depends on actual earnings and price movement. Exposure to RUNE remains part of an asymmetric position as well.
Impermanent loss protection has ended for all liquidity providers. Pool units also describe a claim on assets held through the network's vault system. Vault-security failures can affect those assets independently of relative-price performance.
Liquidity operations have their own pause controls, so functioning swaps do not establish that additions and withdrawals remain available. PauseLP controls can stop both operations globally or for a particular chain. A pool-specific deposit pause can stop additions alone. Separate signing controls can delay outbound settlement. Liquidity caps tied to bonded security can also reject additions while LP operations remain unpaused. Before funding a position, its pool and chain must permit the intended liquidity operation.
LiquidityLockUpBlocks sets a direct LP's withdrawal wait from its last addition. RUNEPool's separate withdrawal wait uses RUNEPoolDepositMaturityBlocks from its last deposit. RUNEPool also rejects a withdrawal if the resulting reserve deposit would exceed POLMaxNetworkDeposit plus RUNEPoolMaxReserveBackstop.
Still wondering about Thorchain liquidity pools?
Are liquidity-unit Counts Comparable Between Different Pools?
Liquidity-unit counts from different pools do not measure comparable asset value on their own. Each pool has its own balances and total units. A position's fraction of its pool establishes its underlying quantities. Comparing value then requires pricing those quantities consistently, rather than ranking positions by their raw unit counts.
Will an Unpaired RUNE Deposit Merge With My asset-only LP Position?
An unpaired RUNE-only addition creates a separate position from an existing external-asset-only position. The asset-only position remains associated with its depositing address. Supplying the other asset later does not automatically link the earlier positions. The protocol's addition rules and the addresses used determine which position receives the new liquidity units.
Does a Positive LUVI Return Mean My Position Gained Dollar Value?
A positive LUVI return does not establish a gain in dollar value. LUVI measures the relationship between pool depths and total units, while dollar valuation also uses market prices. The underlying assets can lose dollar value while LUVI rises. Measuring personal performance also requires accounting for when contributions and withdrawals occurred.
What Happens to an Affiliate Fee on a Liquidity Addition?
An affiliate fee on a direct liquidity addition credits the affiliate with an LP position. That allocation differs from assigning all contributed liquidity to the depositor. An interface's affiliate setting therefore affects the units that each participant receives. Pool-share calculations should use the depositor's credited units after the allocation.
Can I Change the Payout Address When Withdrawing From a single-address LP Position?
A single-address LP position withdraws to the same asset and address associated with its deposit. The withdrawal memo's asset choice does not authorize an arbitrary new recipient. This differs from a linked dual-address position's payout options. Retaining access to the depositing address matters even if an interface displays the position correctly.
Which Position Details Can Someone View Through My Public LP Address?
A public LP address allows someone to query the liquidity position associated with it. The returned data can include credited units, pending amounts, deposit values, and associated addresses. Historical services can also show additions and withdrawals. Address-based visibility does not grant withdrawal authority, which requires the appropriate signed transaction.