Interblockchain settlements protocol THORChain paused 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, messages from THORChain’s Telegram channels show.
THORChain’s lending program only has BTC and ETH, but its saver vaults support more assets.
A potential insolvency situation could be created if all loans and savers positions were closed and repaid at exactly the same time, and 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 liabilities of nearly $200 million. Of that, some $107 million is contained in liquidity pools, which could be withdrawn or sold by liquidity providers (LPs) or RUNE holders in case of panic.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’s cross-chain swaps – its main service – remain unaffected. Users can still perform swaps and utilize liquidity pools without disruptions.
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