Key Highlights:
- THORChain has suspended Bitcoin (BTC) and Ether (ETH) withdrawals from its lending and savers programs to mitigate potential insolvency risks.
- This decision follows a proposal from network node operators to implement a 90-day pause announced early Friday during the Asian market hours.
- While the lending program is affected, THORChain’s cross-chain swaps, which are its main feature, continue to operate without disruption.
THORChain, known for its interblockchain settlements, took these measures to formulate a debt resolution plan. The lending service exclusively offered BTC and ETH, with its saver vaults supporting multiple assets.
Concerns about insolvency arose if all loans and savings positions were simultaneously closed and if there was a significant drop in market sentiment affecting RUNE’s value.
THORChain typically meets its lending obligations by minting RUNE and selling it into liquidity pools, ceasing deposits a year ago due to community concerns about risk. Allegations have surfaced regarding liabilities nearing $200 million, with $107 million potentially retrievable by liquidity providers (LPs) or RUNE holders in crisis scenarios.
Quote by TCB:
“@THORChain is insolvent. In the event of a large debt redemption or deleveraging of savers and synths, TC cannot fulfill its Bitcoin and ETH obligations.” (January 24, 2025)
Despite these challenges, users can continue performing swaps and utilizing liquidity pools without experiencing interruptions.
