THORChain Suspends BTC, ETH Withdrawals Amid Solvency Concerns
Interblockchain settlements protocol THORChain has temporarily halted bitcoin (BTC) and ether (ETH) withdrawals from its lending and savers programs to address potential insolvency risks, following rising concerns within the community.
The suspension, initiated by network node operators, includes a 90-day pause announced early Friday in Asian trading hours, according to messages shared in THORChain’s Telegram channels. This move aims to give developers and the community time to formulate a plan to address the platform’s outstanding debts.
While the lending program only supports BTC and ETH, THORChain’s saver vaults include a broader range of assets. The risk of insolvency could arise if all loans and savers positions were simultaneously closed and repaid, combined with a sharp drop in the price of RUNE, THORChain’s native token.
To meet its lending obligations, THORChain mints RUNE and sells it into liquidity pools. However, deposits into the program had been disabled for a year, as concerns over the protocol’s ability to manage liabilities grew.
Some community members estimate THORChain’s liabilities at nearly $200 million, with around $107 million tied up in liquidity pools. In a worst-case scenario, these funds could be withdrawn or sold by liquidity providers (LPs) or RUNE holders, potentially exacerbating the situation.
Despite these challenges, THORChain’s core service of cross-chain swaps remains fully operational. Users can continue to perform swaps and interact with liquidity pools without any interruptions.
