THORChain Temporarily Suspends Bitcoin and Ether Lending and Savings Programs

THORChain, a decentralized protocol that enables crosschain swaps, has temporarily suspended its Bitcoin and Ether lending and savings programs.

Decentralized crosschain protocol THORChain has paused its BTC and ETH lending and savings programs to help the protocol restructure its $200 million in liabilities.

The move was approved by network node operators and announced on the project’s Discord by Orion, a pseudonymous THORChain developer. The pause will reportedly last for 90 days, during which swaps will continue uninterrupted.

The decision aims to protect network stability and provide time for the community to craft a recovery plan, according to Orion.

THORChain is a decentralized liquidity protocol that facilitates crosschain swaps, enabling users to trade assets like BTC and ETH without relying on centralized intermediaries.

These trades are powered by liquidity pools that are, in turn, supported by user deposits. Liquidity is maintained and transactions are settled using THORChain’s native token, RUNE.

The ThorFi lending and savers programs, which are now paused, provided users with the opportunity to earn yields on their BTC and ETH deposits or to borrow against their holdings.

With the mounting liabilities and the threat of a “run” on the protocol, the temporary suspension is intended to prevent a cascade of liquidations and stabilize THORChain’s financial position.

The decision has elicited a range of responses, with some community members expressing confidence in the protocol’s ability to service its debts once a new plan is in place.

Others have likened the situation to a Chapter 11 bankruptcy and called for a collaborative approach to preserving the protocol’s value.

Notably, ShapeShift founder Eric Voorhees has acknowledged that while the suspension was necessary, it highlights the risks of the experimental lending and saving models that have now proven unsustainable.

Voorhees added that these features had been flagged as high-risk long before the current suspension.

Despite these challenges, THORChain’s core decentralized exchange functionality remains operational, allowing liquidity providers to continue making deposits and withdrawals.

However, the price of RUNE has dropped by 32%, reflecting market concerns about the protocol’s financial health.

The THORChain development team has yet to publicly comment on the next steps, but the community has 90 days to propose a plan for addressing the liabilities and restoring confidence in the network.