THORChain News: RUNE Dives 30% as Bitcoin, Ether Based Services Paused

INFBusiness
25.01.2025
Markets

The pause comes amid community concerns around the settlements protocol solvency.

Updated Jan 24, 2025, 8:31 a.m. UTCPublished Jan 24, 2025, 7:01 a.m. UTC

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.

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 Of that, some $107 million is contained in liquidity pools, which could be withdrawn or sold by liquidity providers (LPs) or RUNE holders in case of panic.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

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

🔽🧵

— TCB (@1984_is_today) January 24, 2025