A decentralized cross-chain liquidity protocol Torchein ThorFi suspended its savings and loan programs Thursday, preventing users from withdrawing Bitcoin, EthereumAnd other crypto assets from embedded services.
About $111 million worth of digital assets have been liquidated. It is borrowed. With the Thorchain protocol and $98 million worth of crypto currently locked away in thrift stores. Funds received from depositors include $57 million worth of Bitcoin and $16 million worth of Ethereum per Torchain. Dashboard.
The problem is that anyone who has money in ThorFi at the moment cannot withdraw it, because the network has suffered a loss of 200 million dollars. The operators of the Torchchain network have blocked these funds in order to prevent a risk situation for the DeFi protocol. Dragonfly Capital's managing partner likened the move to “loss snow.”First, restructuring the chainHe said.
According to Torchein founder JP Thorbjornsen, the decision was made “through the nodes”. he said. The move on X gave the Torch community 90 days to come up with a restructuring plan, and said “everyone [to] cool down”
As a decentralized finance, or DeFi, protocol, Thorchain allows users to exchange assets across multiple networks in a permissionless manner—reflecting that centralized exchange services cannot fully control user funds.
In the year In 2022, THORChain released its savings program, with a Blog post As a way for DeFi users to “earn in kind” in the same way as Thorchain liquidity providers.
According to TCB, a member of the Torchchain community, the network is “lost”. When users tried to take on $199 million in debts on Thorchain, the network was unable to sustain its obligations. he said. By X.
The network currently meets its loan obligations by mining RUNE, the network's native asset, and selling that to liquidity pools on Thorchain, TCB said. That created a vicious cycle, with ransoms exacerbating Torchein's obligations, even though RUNE was burning when users first interacted with the saver program.
Recently, redemptions from savers and lenders have increased the supply of RUNE, driving down its value. So far this month, 6.6 million RUNE have been burned and 16 million have been withdrawn. thorcharts.
“RUNE will go downhill and THORChain will be destroyed,” TCB said, noting that if the Torchchain community decides to abandon the protocol, only a handful of people may opt out of the THORFi service first.
As of this writing, the price of RUNE has dropped by 29% on Friday 2.08 dollarsAfter hitting its lowest price since October 2023 and peaking in May 2021, RUNE was valued at $20.87.
THORChain supporters, including ShapeShift CEO and Bitcoin OG Erik Vorhees, believe the protocol is still worth saving despite bad debt weighing on RUNE's value.
By X, Vorhees It is described Torchein is one of the “most important protocols in the ecosystem”. As he says DepilamaHe has collected $47 million in lifetime earnings.
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