The post THORChain urgently drops ‘risky’ DeFi features amid $199 million debt appeared on BitcoinEthereumNews.com.

THORChain has suspended Bitcoin and Ethereum withdrawals within its lending and savings programs after reports of a $199 million liability surfaced. On Jan. 24, THORChain founder John-Paul Thorbjornsen disclosed that validator node activities for THORFi services have been paused. This suspension temporarily halts debt repayments and synthetic asset redemptions while validators deliberate on a restructuring plan. Despite these disruptions, trading and swapping functions remain operational. The problem On Jan. 24, TCB, a prominent investor and protocol node runner, revealed that THORChain’s debts include $97 million in loans and $102 million in savers and synthetic assets. Meanwhile, the protocol holds $107 million in liquidity, which liquidity providers can withdraw at any time. This imbalance poses a significant risk to the platform’s stability. To address this situation, TCB highlighted two possible scenarios where a small percentage of creditors withdraw their funds rapidly, risking a collapse, or the protocol pauses operations to restructure its debts. The latter option aims to ensure the platform’s long-term viability. ShapeShift’s CEO Erik Voorhees further explained that the lending and savings programs were experimental features that introduced significant risks. According to him: “Lending and Savers were two additions to Thorchain which were experimental. At this point, it’s clear these designs failed, they were too risky. While these functions were not core to the protocol, their risk has been a dismal overhang for a while–nobody was sure how long it would take for users to clear out their positions.” Another contributor, Proof of Steve, stated that excessive reliance on the RUNE, the protocol’s native token, to cover risks made the platform vulnerable to external threats. He supported the suspension, noting it gives the community time to devise a sustainable solution. ThorChain profitability Thorbjornsen assured users that the platform generates sufficient revenue to address its liabilities after restructuring. However, he…

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Filed under: News - @ January 24, 2025 2:29 pm