THORChain Faces Insolvency Amid Debt Challenges

According to PANews, THORChain is currently facing insolvency, as disclosed by X user TCB. The platform's liabilities include $97 million in loans (in ETH and BTC) and approximately $102 million in savings and synthetic assets, while available assets amount to only $107 million in external liquidity. TCB noted that THORChain fulfills its loan obligations by minting and selling RUNE tokens, a design that has exacerbated the issue due to its reflexive nature. After repaying $4 million in RUNE debt yesterday, the protocol incurred additional millions in RUNE liabilities. Validator nodes have paused network operations and are voting on a restructuring plan. THORChain is considering two options: maintaining the status quo, which would allow early exiters to extract about 5-7% of value and lead to a continued decline in RUNE, or declaring debt default to preserve valuable parts through bankruptcy restructuring, gradually repaying creditors without compromising the protocol's viability. TCB recommends the latter approach to protect liquidity providers' interests, maintain network value, and achieve long-term growth. Currently, THORChain's (RUNE) price is reported at $2.27, with a 24-hour decline of 29%.