THORChain’s native token RUNE ($2.36) has lost 30% of its value after the network paused Bitcoin (BTC ($105,161.41)) and Ethereum (ETH ($3,399.37)) withdrawals from its lending and savings programs, sparking concerns about potential bankruptcy risks.
THORChain Halts Bitcoin, Ethereum Withdrawals Amid Solvency Concerns, RUNE Drops 30%
According to messages from THORChain’s Telegram channels, network node operators proposed and implemented a 90-day withdrawal pause today.
The move aims to prevent a possible liquidity crisis and allow time to develop a plan to resolve outstanding debts.
THORChain’s lending program only supports BTC and ETH, but their savings vaults have a wider range of assets.
The protocol risks bankruptcy if all loans and savings positions are closed at the same time, especially if market sentiment triggers a sharp decline in the price of RUNE.
The protocol meets its lending obligations by minting RUNE and selling it to liquidity pools, a mechanism that has raised concerns in the past. In fact, THORChain had already disabled new deposits a year ago due to fears of increased risk.
Some community members estimate that THORChain’s liabilities are around $200 million, with $107 million of them sitting in liquidity pools.
If liquidity providers (LPs) or RUNE holders panic and begin to withdraw or sell their assets, this could further strain the stability of the protocol.
Despite the turbulence, THORChain’s core service of cross-chain swaps has not been affected. Users can continue to swap and benefit from liquidity pools without interruption.
*This is not investment advice.
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