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Crypto Potato 2025-02-04 01:08:07

Governance Votes in Favor of Proposal 6 to Resolve THORChain’s Liquidity Crisis

THORChain’s governance body has passed Proposal 6 as part of its restructuring efforts to resolve a nearly $200 million debt crisis. The approved plan involves converting defaulted debt into TCY (Thorchain Yield) equity tokens, eliminating the need for a private raise, and leveraging existing treasury funds to facilitate recovery. Under this framework , 200 million TCY tokens will be minted and distributed to affected users at a rate of one token per dollar of defaulted debt. These tokens will receive 10% of protocol fees indefinitely, providing long-term incentives for liquidity providers and aligning interests across the ecosystem. A shallow RUNE/TCY pool will be established at $0.10 per TCY, with $5 million in treasury funds allocated for strategic buybacks over ten weeks in a bid to ensure a more stable price discovery process. The proposal also introduces Liquidity Nodes to ramp up capital efficiency and offset forfeited fees, thereby strengthening governance participation for liquidity providers. By writing off debt through an equity conversion, the protocol remains solvent without minting additional RUNE, while affected users gain a potential path to full recovery. The latest development comes after the decentralized cross-chain liquidity protocol temporarily suspended its THORFi services on January 23rd in response to financial instability and insolvency rumors. A 90-day restructuring plan was put in place to address challenges arising from its Savers and Lending programs, which have accumulated excessive debt. Trading activities, including swaps, remained unaffected, but lending services were on hold as validator nodes oversaw the restructuring process. “The Jan 23 pause set the conditions for community members to decide on a restructuring plan to ensure the network’s continued operation while compensating Lending and Savers users. The community stepped up, proposing 8 independent plans, which were reviewed and voted on by Node Operators.” Its native token, RUNE, has been on a steady decline since the first week of December. It took a deep plunge following the suspension of THORFi. Despite minor hints of recovery, RUNE continued its downtrend, shedding almost 80% over the past month alone. It was currently trading at $1.21. The post Governance Votes in Favor of Proposal 6 to Resolve THORChain’s Liquidity Crisis appeared first on CryptoPotato .

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