THORChain Converts $200M of Bad Debt Into Equity via New Token, TCY

TCY tokens will be distributed at a rate of 1 TCY per dollar of defaulted debt, turning lenders and savers into equity holders.

Decentralized cross-chain liquidity protocol THORChain (RUNE) has proposed converting nearly $200 million of unserviceable debt into equity via a new token, TCY (Thorchain Yield).

This move comes after suspending THORFi services on Jan. 23 due to financial uncertainties, as CoinDesk earlier reported.

According to Proposal6, that was passed by THORChain members on Feb. 13, the TCY tokens will be distributed at a rate of 1 TCY per dollar of defaulted debt, turning lenders and savers into equity holders.

The platform plans to establish a RUNE/TCY liquidity pool with $500,000 starting at $0.1 per TCY, funded by $5 million from the treasury.

Holders of TCY will receive 10% of THORChain's revenue indefinitely, providing a long-term incentive and recovery mechanism for those affected by the debt crisis.

However, the timeline for total financial recovery remains uncertain.

THORChain's cross-chain swaps, its main service, remain unaffected. Prices of the platform’s native RUNE are down 10% in the past 24 hours alongside a broader market fall, extending 30-day losses to nearly 50%.