This episode unveils Rujira's ambitious plan to build a "decentralized Binance" on ThorChain, leveraging native cross-chain asset capabilities to unlock new DeFi frontiers, particularly for assets like Bitcoin.
Introducing Rujira and the ThorChain Vision
- Mark Jeffrey introduces PM Pragmatic Monkey (PM) from Rujira, setting the stage for a discussion on their work within the ThorChain ecosystem.
- ThorChain is described by Mark as a "cross-chain DEX that is powered by a chain," enabling permissionless swaps of native assets like Bitcoin directly between different blockchains.
- Cross-chain DEX (Decentralized Exchange): A platform allowing users to trade cryptocurrencies directly from their wallets across different blockchain networks without intermediaries.
- PM elaborates, stating ThorChain acts as a foundational layer connecting various blockchains, including those without smart contract capabilities (e.g., Bitcoin, Dogecoin). This is achieved using the Cosmos SDK.
- Cosmos SDK (Software Development Kit): A framework for building custom, interoperable blockchains.
- PM highlights the core value: "I have Bitcoin on the Bitcoin chain. I want Ethereum on the Ethereum chain and in a fully permissionless decentralized fashion. I sign a transaction on my Bitcoin wallet and a few blocks later I get my Ethereum in my Ethereum wallet."
- PM, initially an observer, was drawn to ThorChain's "OG, cyberpunk" culture and its philosophical alignment before diving deep into its technology last summer.
The Genesis of Rujira: From Kujira on Terra to a ThorChain App Layer
- PM recounts his journey starting with Kujira, an application initially on the Terra blockchain in 2021.
- Kujira's first app, Orca, aimed to democratize liquidations.
- Liquidations (in DeFi): The process of selling a borrower's collateral when its value falls below a certain threshold relative to the loan, to protect lenders from losses.
- Orca introduced an auction process for at-risk collateral from Anchor Protocol (Terra's major lending protocol), making liquidations more competitive and fairer compared to traditional systems dominated by MEV bots.
- MEV (Maximal Extractable Value) bots: Automated programs that seek to profit from blockchain transactions by reordering, inserting, or censoring them.
- Mark Jeffrey provides context on the difficulty for average users to participate in liquidations, emphasizing how Orca created a marketplace and competition.
- Kujira launched a second product, Finn (a 100% on-chain order book DEX), on the day the UST stablecoin de-pegged, marking the beginning of Terra's collapse.
- PM shares his personal story of increased involvement post-Terra collapse, aligning with Kujira's mission to build a "more fair, more transparent, and more accessible financial ecosystem."
- Kujira subsequently relaunched as an independent sovereign chain in the Cosmos ecosystem.
Kujira's DeFi Suite and the Liquidity Challenge
- PM details the core components of Kujira's DeFi suite built on its Cosmos chain:
- Finn: A 100% on-chain order book DEX, with on-chain order matching, which PM claims is unique in its ability to scale with zero-to-one complexity.
- Order Book DEX: A type of decentralized exchange that matches buy and sell orders based on price levels, similar to traditional stock exchanges.
- AMM (Automated Market Maker): A separate multi-strategy AMM that layers liquidity onto the order book, distinct from typical DEXs where the AMM is the DEX.
- A money market for lending and borrowing, reintroducing the Orca liquidation engine.
- A key planned feature was a Bitcoin-backed stablecoin, made possible by ThorChain's native Bitcoin integration, avoiding wrapped assets.
- Wrapped Bitcoin (wBTC): An ERC-20 token on Ethereum (or similar tokens on other chains) that represents Bitcoin. It requires trusting a custodian to hold the actual Bitcoin.
- PM emphasizes the significance: "That's I think the biggest point today if you want to use bitcoin um in defy uh your best shot the biggest market is to use rap bitcoin which what is rap bitcoin? It's a bitcoin that is issued by a centralized custodian."
- Mark highlights the vast untapped potential of Bitcoin's $2 trillion liquidity, mostly idle due to lack of safe, native DeFi utility.
- Despite innovative tech, Kujira struggled to attract liquidity within the smaller Cosmos ecosystem, described by PM as having "an amazing rocket but we had no fuel to make it fly."
The ThorChain Lifeline: Merger and the Birth of Rujira
- A "mismanaged risk" incident in August of the previous year led to $3 million in bad debt on Kujira, prompting a co-founder's departure and PM officially joining the team.
- This period coincided with meeting JP Thor (Gipito) of ThorChain, who envisioned an app layer on ThorChain.
- Gipito recognized Kujira's potential and "took a bet on us," backstopping an emergency Kuji token sale to clear the bad debt.
- The deal involved Kujira migrating its technology and team to build this app layer on ThorChain, eventually sunsetting the Kujira chain and rebranding relevant efforts under Rujira.
- Mark Jeffrey aptly summarizes: "You got peanut butter, I got jelly, let's make a sandwich."
- The merger included Kujira, the Levana team (for perpetuals), an NFT marketplace team, and a launchpad team, all consolidating under the new RUI token for the app layer.
- RUI token holders will receive a share of cash flows from all apps, with an initial 50/50 revenue split with the ThorChain base layer (Rune holders, node operators, LPs) to pay for economic security and native asset access.
- ThorChain's current revenue is cited as $50k-$80k per day, which PM notes is highly profitable for a blockchain.
Rujira's Development and Current Status
- The journey involved significant technical work, including upgrading ThorChain's older Cosmos SDK version (v46 to v50), spearheaded by Kujira's technical co-founder, "Code Ant."
- A core innovation is "secured assets": native assets from connected chains (like Bitcoin) represented on the Rujira app layer, secured by ThorChain's MPC vaults.
- MPC (Multi-Party Computation) Vaults: Cryptographic systems where a private key is split among multiple parties (ThorChain nodes), requiring a threshold to sign transactions, enhancing security over single-custodian solutions.
- The Rujira merge contract for token swaps (Kuji, LVN to RUI) is live, with RUI distribution expected by month-end.
- The first apps, Rujira Trade (order book DEX) and Rujira Pools (AMM), launched two weeks prior with a limited set of ecosystem tokens for initial testing. PM states, "It's really just okay a proof of concept for now uh to test things to refine the UI to really like get things ready."
The Roadmap to a "Decentralized Binance"
- Key Next Step: Virtualizing ThorChain's base layer liquidity (currently ~$160 million) into Rujira's order book. This involves a strategy where Rujira market makers can borrow assets for one block to fill app-layer orders, then settle on the base layer, earning a small margin.
- Future Enhancements:
- Adding diverse market-making strategies (e.g., concentrated liquidity, oracle-based orders).
- An affiliate model (like ThorChain's) and a referral fee model (paid from Rujira's revenue share) to incentivize integrators and KOLs.
- One-click trading for improved UX.
- "Rujira Leagues": A gamified points system rewarding users based on revenue generated for the chain.
- PM estimates it will take "probably a good year to really like" reach the full vision of a decentralized Binance.
The Native Bitcoin-Backed Stablecoin: Potential and Challenges
- PM expresses strong enthusiasm for a native Bitcoin-backed stablecoin on Rujira.
- The initial design would likely be a standard CDP (Collateralized Debt Position) model, similar to MakerDAO, rather than a synthetic design like Ethena's USDe.
- CDP (Collateralized Debt Position): A system where users lock up collateral (e.g., Bitcoin) to mint a stablecoin, with liquidation mechanisms if the collateral value drops.
- A major hurdle is ThorChain's "security budget": historically requiring $2 of bonded Rune for every $1 of exogenous assets secured.
- PM argues this model is "constraining the growth of our chain" and may need re-evaluation or relaxation to allow for significant scaling, especially for a Bitcoin-backed stablecoin that could attract substantial deposits.
- Alternative solutions like "cold vaults" (delaying full withdrawal access for a portion of assets) are being considered.
- Exporting this stablecoin to other ecosystems presents another security conundrum, as the value would leave ThorChain while still relying on its security.
Actionable Insights for Crypto AI Investors & Researchers
- Decentralized Infrastructure: Rujira's app layer on ThorChain represents a step towards more sophisticated decentralized financial infrastructure. For AI researchers, the development of robust, interoperable, and permissionless platforms is crucial for future decentralized AI applications, data marketplaces, or compute networks.
- Native Asset Utility: The focus on unlocking utility for native assets like Bitcoin without relying on wrapped versions or centralized custodians is a key trend. This principle of trust minimization and direct asset control could be vital for AI models or data assets that require high security and verifiability on-chain.
- Economic Model Innovation: The revenue-sharing mechanisms between Rujira (RUI) and ThorChain (Rune), along with planned affiliate/referral systems and gamified engagement (Rujira Leagues), offer interesting models for incentivizing participation and value creation in decentralized ecosystems. These could inspire tokenomics for Crypto AI platforms.
- Security vs. Scalability Trade-offs: The discussion around ThorChain's security budget highlights a fundamental challenge in decentralized systems. As Crypto AI platforms aim to scale and handle more value or sensitive data/models, navigating these security, decentralization, and scalability trade-offs will be critical. PM's perspective suggests a potential shift towards more "equity-like thinking" focusing on future cash flows to drive network value and security.
- Interoperability as a Growth Catalyst: The core premise of ThorChain and Rujira is to break down silos between blockchains. For Crypto AI, where data, models, and compute resources might reside on different chains or systems, such interoperability solutions are foundational for growth and innovation.
Speaker Insights
- PM Pragmatic Monkey (Rujira): Demonstrates deep technical understanding and a pragmatic approach to building complex DeFi systems. His narrative reveals resilience (through Terra's collapse and Kujira's challenges) and a clear vision for Rujira's potential, grounded in the lessons learned.
- Mark Jeffrey (Host): Facilitates the conversation effectively, drawing out key details and providing helpful analogies (like the "peanut butter and jelly" for the Rujira-ThorChain synergy) to clarify complex topics for the audience. His familiarity with ThorChain adds depth to the discussion.
Conclusion
Rujira's development on ThorChain aims to create a truly decentralized, cross-chain financial hub, with native Bitcoin utility as a cornerstone. Crypto AI investors and researchers should monitor such advancements in decentralized infrastructure and economic models, as they lay groundwork for future permissionless innovation and value transfer across diverse digital ecosystems.
Where to Follow
- PM Pragmatic Monkey: On X (formerly Twitter) @PragmaticMonkey
- Rujira:
rujira.network or on X @RujiraNetwork. Community engagement primarily on Telegram; a dev Discord is also available.
