The core developers behind THORChain (RUNE) have declared a comprehensive restructuring plan designed to manage an accumulated debt of approximately $200 million, incurred through their Lending and Savings program. This critical decision was reached after weeks of rigorous community debate and a noticeable decrease in network activity.
January 23 marked a significant turning point in the saga. Following considerable deliberation regarding the potential risks associated with THORFi, Node Operators decided to halt refunds for the lending and savings functions. This decision sparked a profound backlash within the THORChain ecosystem. The fallout was significant: 31 validators chose to depart from the network, $100 million worth of liquidity evaporated, and the price of RUNE experienced a dramatic downturn.
Despite these tumultuous setbacks, THORChain has remained operational. The network has continued to process cross-chain swaps, verify transactions, and generate revenue, according to the development team.
In an effort to address the crisis, community members proposed eight varying restructuring plans. These were carefully examined and voted upon by the Node Operators. The winning proposal, aptly named “Proposal6,” was developed by AaluxxMyth of Maya Protocol.
Fundamental components of the approved plan include the conversion of the $200 million debt into equity through a new revenue sharing token. Debt holders will be allotted one equity token for every dollar they owe. Further, equity token holders are set to receive 10% of THORChain’s revenue indefinitely. Additionally, a liquidity pool will be established by the THORChain treasury to allow claimants the option to sell their claims at market value.
Although the exact timeline and details of the implementation are pending finalization, the THORChain team has pledged to provide regular updates throughout the reconstruction process. Despite the recent challenges, the developers maintain an optimistic outlook, stating, “THORChain will continue to operate and emerge stronger than ever despite these challenges.”
However, the announced plan seems to have had little immediate impact on the price of RUNE, indicating that the market may be waiting for further concrete action and evidence of progress. As always, these developments serve as a useful reminder that while the world of cryptocurrency can offer significant rewards, it also comes with substantial risks, and a prudent approach to investment is always advisable.
*This is not investment advice.
