Monero Full Steam Ahead: Dynamic Fees, Opt-In Chains & the Arb Debate

THORSday Community Space ft. @CBarraford, @KentonC137 & @patriotsounds & @BooneW  | April 16, 2026

By @Raynalytics

TL;DR

• $XMR integration is targeting version 3.18, with the PR nearly ready to merge and chaosnet testing next. $DOT and $TAO are also being built as substrate chain clients for the same release.
• Chad proposed a dynamic fee model that adjusts swap fees per THORName and per trading pair using statistical analysis, allowing THORChain to be price-competitive where it needs to be without sacrificing revenue from captive interfaces.
• Opt-in chain client security is being developed so node operators can choose which chains to run, enabling THORChain to scale to many more chains without requiring every validator to run every daemon.
• The dev fund address change (ADR25) is stuck at 36% approval. Nine Realms wraps up this month, so nodes need to vote immediately to stop funds going to an inactive team.
• CoinGecko and Gecko Terminal now have live THORChain trading data across all pairs.

1. $XMR Integration: Christmas Day for Cypherpunks

The Monero conversation dominated again, and for good reason. @CBarraford confirmed the PR is nearly ready to merge, with @jpthor also contributing code reviews. The next step is chaosnet testing, which is essentially a staging environment running real funds with fewer nodes.

The target is version 3.18, which gets cut roughly one month from now. Version 3.17 is already on stagenet being validated by the @Maya_Protocol team. Once 3.17 ships, Monero can enter the pipeline for 3.18. If bugs surface in production, they can be patched quickly via a 3.18.1 release.

"I'm still in disbelief. This is really happening. This is something we've all been excited about for a long time. One of the things that sold me on THORChain was the promise of Monero."

Chad walked through Monero's unique technical characteristics in detail. The 10-block confirmation requirement (approximately 20 minutes) applies to spending newly created UTXOs, not to receiving deposits. THORChain already manages UTXOs by spending the oldest first, so in most cases users won't notice any delay. The exception is after a UTXO consolidation event, which could temporarily lock all funds for up to 20 minutes. The network is fault-tolerant enough to handle this by retrying until the lock period expires.

For the single-vault FROST TSS implementation, all active validators (approximately 100 nodes) will participate in key generation for $XMR. Chad expects this to work based on FROST's simpler, faster architecture compared to GG20, but acknowledged that mainnet may surface unexpected issues. He was refreshingly direct about this: "I would not be shocked or surprised if we ran into a whole myriad of problems." The approach is to ship, find bugs, fix them, and iterate.

Streaming swaps are unaffected by Monero's confirmation delays since they execute internally within the protocol. Arbitrageurs will face the question of which centralized exchanges they can even use for $XMR price balancing, given ongoing delistings.

"We're the first ones to do this. There's going to be growing pains. There's probably going to be bugs. But we're going to fix them."

Chad noted that wallets are already reaching out to integrate THORChain specifically for $XMR access, with some saying they'll have support ready the moment mainnet goes live. On CoinGecko, $XMR's DEX trading page currently shows zero pairs. THORChain will be the only listing.

@BooneW is appearing on @monero Talk today (8 PM Eastern) to discuss the integration, spreading the word to Monero's dedicated community.

2. $DOT and $TAO: Substrate Chain Clients

In addition to Monero, Chad is targeting Polkadot and $TAO (both substrate-based chains) for version 3.18. A community member previously built a $TAO chain client, but it was hardcoded specifically for $TAO. Chad's approach is to build a reusable substrate implementation (similar to the EVM implementation used for Ethereum and Avalanche) so additional substrate chains can be added with minimal friction going forward.

$DOT currently sits at #43 on CoinGecko. Chad's perspective: "We're an exchange. I don't really care if I like Polkadot or not. It's still a very economically powerful token."

3. Dynamic Swap Fee Model: Per-THORName Price Optimization

This was the biggest new proposal of the episode. Chad described a meeting with a wallet doing $307 million in monthly volume, of which only about 1% currently routes through THORChain. The problem: THORChain's flat 10 basis point fee isn't competitive enough to capture that volume, but lowering fees globally would sacrifice revenue from interfaces like swap.thorchain.org where THORChain has no competition.

The solution is a dynamic fee system that tracks volume and fees per THORName and per trading pair, then uses statistical analysis to step fees up or down (e.g., from 10 bps to 9 or 11) and observe the results. This allows THORChain to charge competitively against @SwapKitPowered's aggregator competition (where Layer Zero does 2-3 bps) while maintaining or even increasing fees on captive interfaces.

"Instead of being a flat rate, we're more like a wave that has high and low fees depending upon where it makes the most sense."

Key design details:

The system requires THORName whitelisting to prevent individuals from creating personal THORNames to get low fees. It will only apply to L1 swaps, not secured asset (arbitrage) trades. Chad already has a draft PR open (MR #4752) with an ADR. The plan is to test on a single THORName first, likely with the wallet from that meeting.

Kenton suggested using the system as a marketing tool: offer near-zero fees to new wallet integrations for 30 days to incentivize onboarding, then let the dynamic system discover optimal pricing. Chad confirmed this is technically possible through the "deadband" mechanism, though fees should never go to true zero due to price manipulation risk.

"If we do this, we could totally rug a lot of the competition in the industry and get a ton more volume."

Bringing it back to $XMR, Chad noted that if THORChain is the only DEX offering Monero swaps, the dynamic system could discover that 50 basis points is optimal for that pool, since Monero users tend to be price-insensitive and the use case is unique.

4. The Arbitrage Debate: Protocol-Owned ARBing

A wide-ranging discussion on whether arbitrageurs extract or add value to the protocol. Chad's position: ARBs extract value because they must profit from the trade to justify making it, meaning funds leave the protocol with every arb. According to @PragmaticMonkey, ARBs make roughly $3 million per month on THORChain. Chad thinks the real number is closer to $300,000-$600,000, but either way, that's value that could stay as system income.

Chad expressed frustration that current ARBs aren't sufficiently utilizing Rapid Swaps, and floated the idea of protocol-owned arbitrage: giving the protocol a pool of $RUNE that uses the price oracle to correct pool prices internally, capturing the arbitrage profit as system income rather than letting it leak to external traders.

@RujiraNetwork is also working on app-layer ARB bots and concentrated liquidity solutions that could tighten pool pricing using the protocol's existing price oracle (which aggregates prices from 18+ exchanges via 100 validators). Chad acknowledged the potential that Rujira's approach could naturally edge out external ARBs over time.

The oracle discussion evolved into a fascinating tangent: THORChain's original selling point was "no oracles," but the protocol has since built its own internal oracle that proved more reliable than centralized alternatives (referencing a November liquidation event on Binance where THORChain's oracle performed flawlessly). Chad argued this internal oracle is actually more decentralized than relying on 5-10 external ARBs for price discovery.

5. Opt-In Chain Client Security

@BooneW pushed back on Chad's opt-in chain client design, arguing that a minimum of 4 validators per chain is too low. Chad explained the current design: each validator that opts into a chain contributes 100,000 $RUNE in security to that chain's pool cap. Below two-thirds participation, the pool is capped proportionally. At two-thirds or above, it behaves like today's system with no cap.

Boone advocated for a minimum of 40 validators (roughly where THORChain started) rather than 4. Chad countered that forcing all validators to run every chain limits how many chains THORChain can support and dramatically increases costs. The free market should determine participation: nodes running more chains earn more fees, attracting more bond providers.

The discussion also touched on DKLS (a next-generation signing protocol). Chad noted that DKLS currently lacks identifiable aborts, meaning a single rogue node could block key generation without being identified and slashed. The THORSec cryptography team is investigating solutions, but adding identifiable aborts would increase communication rounds and potentially slow signing.

"I haven't lost this battle. I will continue to stand for economic security."

6. Dev Fund Vote: Nodes, Act Now

ADR25 to redirect the dev fund from Nine Realms' address to a new treasury managed by Chad, @AaluxxMyth, and @marcelharmann is stuck at just 36% approval. Nine Realms wraps up this month (possibly as soon as Monday). Until nodes vote, 5% of protocol revenue continues going to an address controlled by a team that is no longer contributing.

"Either we move it to the treasury address or we just turn it off completely."

The options are simple: approve the address change or set the dev fund to 0% via mimir. Either way, the current situation of paying an inactive team needs to end immediately. If you know node operators or bond providers, ping them.

7. Kenton's Updates & Vegas Side Event

@KentonC137 announced that CoinGecko and Gecko Terminal now display THORChain trading pair data across all pools. Kenton is also pursuing "grey hat marketing" to get fake DEXes (like ChangeNow) removed from CoinGecko's Bitcoin DEX volume rankings.

The Las Vegas side event is approaching 50 RSVPs. @cakewallet confirmed attendance, and Randy is reaching out to additional wallets and L1s. Kenton's vision: THORChain community members at conferences are the best salespeople, and side events create organic evangelism that can't be bought.

A scam site (swap.throwchain.org, with reversed letters) was identified. Kenton filed an abuse report with the domain registrar and is working with the Unstoppable Wallet team on ideas to make the legitimate site more visually verifiable. Chad proposed a browser-level solution using domain checksums to generate visual identifiers, making lookalike domains immediately obvious.

8. Huginn AI Update

Chad mentioned that Huginn now uses all three major AI models (Gemini, OpenAI, and Anthropic) working together, which should help reduce hallucinations by cross-checking across different "brains." He's also building a Go binary to collect mainnet data, run statistical analysis, and surface anomalies into Discord for both Huginn and the broader community to triage. Target completion: end of Q2 2026. Once that's done, Huginn will have achieved all the goals Chad originally outlined when he introduced the project in May 2025.

What to Watch

• $XMR chaosnet testing as version 3.17 ships and 3.18 development begins. One month until the 3.18 cut.
• Dynamic fee PR (MR #4752) moving from draft to implementation. Watch for the first THORName to go live with dynamic pricing.
• ADR25 dev fund vote. Nodes need to act before Nine Realms' departure date to avoid wasting protocol revenue.
• $DOT and $TAO substrate chain clients targeting the same 3.18 release.
• Boone on Monero Talk tonight (8 PM Eastern) spreading the $XMR integration news to the Monero community.
• Vegas side event details finalizing. ~50 RSVPs and growing.
• Upcoming episodes: Sal the Agorist on Saturday, @unstoppablebyhs the following weekend.

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