Summary:
THORChain has paused BTC and ETH withdrawals to prevent insolvency.
The pause was implemented after node operators proposed a 90-day halt to address debts.
Concerns arise over liabilities nearing $200 million, with $107 million in liquidity pools.
Cross-chain swaps and liquidity pools remain unaffected despite withdrawal pauses.
THORChain Faces Withdrawal Pause Amid Community Concerns
Interblockchain settlements protocol THORChain has paused Bitcoin (BTC) and Ether (ETH) withdrawals in its lending and savers programs to avert a potential insolvency risk. This drastic measure was proposed and executed by network node operators during early Asian hours on Friday, as they aim to devise a strategy to address outstanding debts, according to messages shared on THORChain's Telegram channels.
The lending program currently supports only BTC and ETH, while the saver vaults allow a wider range of assets. The risk of insolvency could escalate if all loans and savers positions were simultaneously closed and repaid, especially if market sentiment triggers a steep decline in RUNE, THORChain's native token.
To meet its lending obligations, THORChain mints RUNE and sells it into liquidity pools. However, deposits were halted a year ago due to rising community concerns over the protocol's sustainability. Some community members claim the platform is facing liabilities of nearly $200 million, with approximately $107 million locked in liquidity pools, which could be withdrawn or sold by liquidity providers or RUNE holders in a panic.
Despite the pause on withdrawals, THORChain's primary serviceâcross-chain swapsâremains operational. Users can still perform swaps and access liquidity pools without any disruptions.
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