The Crisis of THORChain
As RUNE holders wake up to troubling news and a significant drop in token price, the future of the cross-chain swapping protocol is in question. Can THORChain “get users liquid again” amidst the chaos?
THORChain ‘Death Spiral’
Recent reports have revealed that THORChain suspended Bitcoin and Ethereum withdrawals within its lending and savings programs due to a $199 million liability. As the community anxiously awaits a restructuring plan to address the protocol’s debts and ensure its sustainability, the value of RUNE has plummeted. Initially dropping by nearly 30% to $1.90, RUNE has since fallen by a further 45% and is currently trading at its lowest value since 2020.
- Osmosis cofounder Sunny Aggarwal sarcastically remarked on the situation, suggesting that the downfall of THORChain was predictable.
- Crypto educator @CosmosHoss pointed out that warnings about the RUNE death spiral were ignored by many.
A Solution to ‘Get Users Liquid Again’
Despite the internal strife and criticism from skeptics, members of the THORChain community remain dedicated to the project. Founder John-Paul Thorbjornsen has been vocal about his commitment to the protocol, and influential figures like ShapeShift CEO Erik Voorhees continue to support THORChain.
A recent proposal aimed at ‘getting users liquid again’ passed with a super-majority vote. The plan involves converting defaulted debt to $TCY equity and distributing TCY to affected users. Additionally, 10% of fees will be paid out in RUNE to TCY holders indefinitely. The goal is to restore user confidence, improve capital efficiency, and attract new liquidity to the protocol.
- The proposal aims to reward nodes and DLPs that remain loyal to THORChain and make the protocol stable and sustainable once again.
As THORChain navigates this critical period, the community is hopeful that the protocol can recover and avoid becoming another failed crypto project.