THORChain Pauses Bitcoin And Ether Withdrawals Amid Insolvency Concerns

According to CoinDesk, THORChain has temporarily halted bitcoin (BTC) and ether (ETH) withdrawals from its lending and savers programs to mitigate potential insolvency risks. This decision was made by network node operators who proposed and implemented a 90-day pause during early Asian hours on Friday. The pause aims to provide time to devise a strategy to address existing debts, as indicated by messages from THORChain's Telegram channels. THORChain's lending program currently supports only BTC and ETH, while its saver vaults accommodate a broader range of assets. The potential for insolvency arises if all loans and savers positions are simultaneously closed and repaid, coupled with a significant drop in RUNE's market value. To fulfill its lending obligations, THORChain mints RUNE and sells it into liquidity pools. Due to growing concerns about this risk, deposits were halted a year ago. Community members have raised alarms about liabilities nearing $200 million, with approximately $107 million held in liquidity pools. These funds could be withdrawn or sold by liquidity providers (LPs) or RUNE holders in the event of a market panic. Despite these challenges, THORChain's primary service of cross-chain swaps remains operational. Users can continue to execute swaps and engage with liquidity pools without any interruptions.