THORChain ‘Death Spiral’ Continues as RUNE Plummets 45% to 2020 Lows

On January 24, CryptoSlate reported that THORChain had suspended Bitcoin and Ethereum withdrawals within its lending and savings programs

As RUNE holders continue to encounter more distressing news and a plummeting token price, with the passing proposal 6 by a super majority, can the troubled cross-chain swapping protocol “get users liquid again?”

THORChain ‘death spiral’

On January 24, CryptoSlate reported that THORChain had halted Bitcoin and Ethereum withdrawals within its lending and savings programs following reports of a $199 million liability. As the community awaited a restructuring plan to address the protocol's debts and ensure its long-term viability, RUNE had dropped nearly 30% in value to $1.90. At the time of writing, RUNE has fallen a further 45% and is currently trading at $1.08, its lowest value since 2020.

“If only someone could have seen this coming,” posted Osmosis cofounder Sunny Aggarwal with the “obviously” rolling eyes emoji.

Crypto educator @CosmosHoss commented, “Looks like [Aggarwal] called the THORChain RUNE death spiral long before it happened — but most ignored him.”

Adding fuel to the fire, founder John-Paul (‘JP’) Thorbjornsen has come under intense scrutiny for potential conflicts of interest and activity managing multiple projects. Meanwhile, influential THORChain node and core contributor TB’s private chat was screenshot and shared on X revealing that despite working hard to save the protocol, he had sold all his RUNE.

“I couldn’t identify the next buyer and validators were going to be selling,” he said, adding, “There’s a bunch of validators that are going to sell. I'm not going to stand there like a dumbass.”

Twenty-six more nodes have since followed suit (around 20% of the network), signaling intent to leave and corresponding to approximately 20 million RUNE potentially gearing up to dump on the market.

A solution to ‘get users liquid again’

Despite its internal struggles and a growing clamor of naysayers' attempts at “fudding it to zero,” many members of the THORChain community maintain their commitment. Thorbjornsen has repeatedly taken to X to assure his conviction, with posts like “GM, not going anywhere,” and supporters like ShapeShift CEO and industry OG Erik Voorhees insists on remaining an “ardent supporter.”

As the THORChain team works around the clock to turn the tide of fortune of the troubled protocol, the community unanimously voted in favor of a proposal to ‘get users liquid again’ and convert defaulted debt to $TCY equity with no private raise. “Proposal 6 passed by super-majority. Nodes stepped in to provide certainty and a way forward,” posted Thorbjornsen.

The proposal suggests distributing TCY to affected users with 10% of fees paid out in RUNE to TCY holders in perpetuity. This plan aims to make users whole, increase capital efficiency, and attract new liquidity to the protocol. By writing off the debt and rewarding nodes and DLPs that stay with the protocol, it aims to make THORChain “great and boring again.”

The coming days and weeks will reveal how THORChain navigates this critical time—and whether it can avoid dropping into the abyss of failed crypto projects.

Christina Comben

is a web3 writer, editor, and content manager with a passion for technology and starting important conversations. As an industry OG, she’s not phased by market volatility and frequently scrimps on Starbucks to BTFD.

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