THORChain suspends withdrawals in Bitcoin and Ethereum and RUNE crashes by -30%

The inter-blockchain protocol THORChain has suspended Bitcoin (BTC) and Ethereum (ETH) withdrawals to prevent a potential insolvency risk. Meanwhile, in the last 24 hours, the crypto RUNE has plummeted by -30%. 

THORChain and the suspension of withdrawals in Bitcoin (BTC) and Ethereum (ETH) due to risk of insolvency

The THORChain protocol has suspended Bitcoin (BTC) and Ethereum (ETH) withdrawals from its lending and savings programs (Lending e Savers). The goal is to prevent a potential insolvency risk. 

The decision was actually made by the operators of the THORChain network nodes. These nodes proposed and implemented the pause of withdrawals for a period of 90 days, in order to have time to find a solution. 

In reality, the deposits had been deactivated a year ago, as the community was increasingly concerned about the risk.

On X, describing the THORChain situation is also the crypto entrepreneur Erik Voorhees, founder of the crypto-exchange ShapeShift and CEO of Venice.ai. 

Voorhees explained that the remaining debts and the collateral positions of loan and savings are now frozen and the community must find a way to address them. However, Voorhees added that since THORChain is one of the most profitable protocols in the ecosystem, it is very likely that there are more paths to take to avoid falling into insolvency.

Not only that, the crypto entrepreneur stated that the loan and savings project were two experimental additions to THORChain. This means that these additional projects have failed, as they were too risky for the protocol. 

According to Voorhees, THORChain has done well with its basic DEX protocol, but it has failed to advance this discipline in Lending and Savers.

THORChain and the suspension of withdrawals in Bitcoin and Ethereum: the collapse of RUNE by -30% in 24 hours

Currently, the lending program (Lending) of THORChain includes only BTC and ETH, but its savings vaults (Savers) support more assets.

In practice, a situation of insolvency could occur if all loans and the positions of savers were closed and repaid at exactly the same time. 

Not only that, another cause of insolvency could also derive from the drop in RUNE. In fact, THORChain meets its loan obligations by minting RUNE and selling it in the liquidity pools.

In any case, in the last 24 hours, RUNE has recorded a price dump of -30%. At the time of writing, RUNE is worth $2.25, compared to yesterday’s $3.05. 

This price dump of RUNE becomes -40% compared to a week ago and -57% compared to a month ago. 

The landing on Ledger and the modest success in DeFi

Last October 2024, THORChain landed on the well-known crypto hardware wallet by Ledger. In fact, from that moment, Ledger users have been able to perform native swaps between BTC and ETH directly on the Ledger Live app, without having to go through wrapped tokens or other centralized services.

Launched in 2021, THORChain quickly became a valid answer to the growing demand for new sources of interoperability in the field of cross-chain.

Not only that, even in the world of DeFi, THORChain has demonstrated a modest success. According to the data from DeFiLlama, the TVL of the protocol is over 266 million dollars.