In a significant development for users of the Interblockchain settlements protocol, THORChain has announced a pause on withdrawals for its bitcoin (BTC) and ether (ETH) lending and savers programs. This decision, designed to mitigate potential insolvency risks, was made following discussions among network node operators early on Friday.
The node operators proposed a 90-day pause to develop a comprehensive plan aimed at addressing outstanding debts, as indicated by messages circulating in THORChain’s Telegram channels. While THORChain’s lending program is limited to BTC and ETH, its saver vaults accommodate a wider array of assets.
The halt in withdrawals stems from fears that a simultaneous closure and repayment of all loans and savings positions could lead to an insolvency scenario, especially if diminishing market confidence results in a significant drop in the value of THORChain’s native token, RUNE.
Currently, THORChain meets its lending obligations by minting RUNE and converting it into liquidity pools. Deposits for these programs were suspended a year ago as the community grew increasingly wary of the associated risks.
Concerns have escalated among some community members, with claims suggesting liabilities as high as $200 million. Of this amount, approximately $107 million is tied up in liquidity pools, which are vulnerable to withdrawal or liquidation by liquidity providers (LPs) and RUNE holders in times of market uncertainty.
Despite these challenges, it is essential to note that THORChain’s core functionality—its cross-chain swaps—remains unaffected. Users can continue to engage in swaps and utilize liquidity pools without experiencing any disruptions.
As THORChain navigates this intricate situation, the developments over the next 90 days will be critical in determining the future stability of the platform and restoring confidence among its user base.
