Since news broke regarding the growing debts of THORChain, the price of its token RUNE has dropped over 48% in just a week. Many community members are worried about the token’s trajectory, fearing it may drop to zero. Last week, RUNE traded around $2.45, but it has declined to approximately $1.25. Just yesterday, it plummeted to a low of $1.03 before slightly recovering.

Proposal 6 was recently endorsed by a super majority of THORChain validators, aimed at pulling RUNE back from the brink of collapse. The proposal seeks to transform outstanding debts into equity, helping to stabilize the protocol’s financial health.

Origins of THORChain’s Difficulties

On January 23, THORChain announced a suspension on Bitcoin and Ethereum withdrawals due to an alarming $199 million liability. In the absence of a concrete plan from the team, the community’s concerns intensified, leading to substantial value erosion. Some members even pointed fingers at the founder, John-Paul Thorbjornsen, accusing him of overextending himself through multiple projects.

THORChain Community Update
Thank you to the community members, Node Operators, and builders who have remained committed throughout this critical moment for the network. Your dedication and contributions have been invaluable in shaping the path forward and ensuring THORChain’s…
— THORChain (@THORChain) February 2, 2025

Proposal 6: Restoring Liquidity

Despite the challenges, a dedicated group within the THORChain community continues to show commitment. The recently passed Proposal 6, which aims to convert defaulted debt to equity and re-establish liquidity for users, is a lifeline. It emphasizes making users whole and improving capital efficiency.

This proposal has significant implications for both current and potential liquidity providers, attempting to rejuvenate THORChain’s functionality and market position. Interested observers will monitor the response of RUNE’s market price as the implementation of Proposal 6 unfolds.