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RUNE Plunges 30% as THORChain Pauses Bitcoin, Ether Withdrawals
The pause comes amid community concerns around the settlements protocol solvency.
What to know:
- THORChain paused bitcoin (BTC) and ether (ETH) withdrawals on its lending and savers programs to prevent a potential insolvency risk.
- Network node operators proposed and implemented a 90-day pause in early Asian hours on Friday.
- THORChain's cross-chain swaps - its main service - remain unaffected.
Interblockchain settlements protocol THORChain paused bitcoin (BTC) and ether (ETH) withdrawals on its lending and savers programs to prevent a potential insolvency risk.
Network node operators proposed and implemented a 90-day pause in early Asian hours on Friday, to formulate a plan to resolve debts, messages from THORChain's Telegram channels show.
STORY CONTINUES BELOW
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THORChain's lending program only has BTC and ETH, but its saver vaults support more assets.
A potential insolvency situation could be created if all loans and savers positions were closed and repaid at exactly the same time, and if market sentiment also caused a steep decline in RUNE.
THORChain meets its lending obligations by minting RUNE and selling it into liquidity pools. As such, deposits had been turned off a year ago as the community became increasingly concerned with the risk at the time.
Some community members allege liabilities of nearly $200 million. Of that, some $107 million is contained in liquidity pools, which could be withdrawn or sold by liquidity providers (LPs) or RUNE holders in case of panic.
.@THORChain is insolvent
— TCB (@1984_is_today) January 24, 2025
In the event of any large debt redemption and/or savers & synths deleveraging, it is certain that TC cannot meet its bitcoin and eth denominated obligations.
Validators decided to pause the network while they vote a restructuring plan
🔽🧵
THORChain's cross-chain swaps - its main service - remain unaffected. Users can still perform swaps and utilize liquidity pools without disruptions.
Shaurya Malwa
Shaurya is the Co-Leader of the CoinDesk tokens and data team in Asia with a focus on crypto derivatives, DeFi, market microstructure, and protocol analysis. Shaurya holds over $1,000 in BTC, ETH, SOL, AVAX, SUSHI, CRV, NEAR, YFI, YFII, SHIB, DOGE, USDT, USDC, BNB, MANA, MLN, LINK, XMR, ALGO, VET, CAKE, AAVE, COMP, ROOK, TRX, SNX, RUNE, FTM, ZIL, KSM, ENJ, CKB, JOE, GHST, PERP, BTRFLY, OHM, BANANA, ROME, BURGER, SPIRIT, and ORCA. He provides over $1,000 to liquidity pools on Compound, Curve, SushiSwap, PancakeSwap, BurgerSwap, Orca, AnySwap, SpiritSwap, Rook Protocol, Yearn Finance, Synthetix, Harvest, Redacted Cartel, OlympusDAO, Rome, Trader Joe, and SUN.
