THORChain Pauses Bitcoin (BTC) and Ether (ETH) Withdrawals on Its Lending and Savers Programs to Prevent a Potential Insolvency Risk

Network node operators proposed and implemented a 90-day pause in early Asian hours on Friday, to formulate a plan to resolve debts

THORChain (RUNE) has paused bitcoin (BTC) and ether (ETH) withdrawals from its lending and savers programs to ward off a potential insolvency risk.

Network node operators proposed and implemented the 90-day pause in early Asian hours on Friday, according to messages from THORChain's Telegram channels. The move is intended to provide time to formulate a plan to resolve debts.

THORChain’s lending program only features BTC and ETH, while its saver vaults support a wider range of assets.

A potential insolvency situation could be created if all loans and savers positions were closed and repaid at the same time, especially if market sentiment also caused a steep decline in RUNE.

THORChain meets its lending obligations by minting RUNE and selling it into liquidity pools. As such, deposits had been turned off a year ago as the community became increasingly concerned with the risk at the time.

Some community members allege that liabilities are approaching $200 million, of which some $107 million is contained in liquidity pools, which could be withdrawn or sold by liquidity providers (LPs) or RUNE holders in case of panic.

“THORChain is insolvent. In the event of any large debt redemption and/or savers & synths deleveraging, it is certain that TC cannot meet its bitcoin and eth denominated obligations,” one Telegram user wrote. “Validators decided to pause the network while they vote a restructuring plan.”

THORChain's cross-chain swaps — its main service — remain unaffected. Users can still perform swaps and utilize liquidity pools without disruptions.