Thorchain, the decentralized cross-chain protocol known for its liquidity services, is facing a serious financial crisis. The platform recently paused its lending service, THORFI, following a wave of insolvency concerns. This move has caused widespread panic in the crypto community, and the price of RUNE, Thorchain’s native token, has plummeted by more than 30%. Investors and traders are now wondering if Thorchain’s troubles will escalate into a collapse similar to the infamous Terra (LUNA) crash of 2022.
The problems began when Bitcoin borrowing surged during a period of low prices. This created a need for more RUNE tokens to be minted. However, the Thorchain network struggled with liquidity issues, which compounded the situation. As a result, the price of RUNE began to drop rapidly, causing panic across the platform.
To prevent further market instability, Thorchain’s developers decided to pause the lending function of its THORFI platform. This decision was made to stop a potential panic sell-off that could destabilize the network even more. Although services like swaps remain active, the halt in lending operations has raised concerns about the long-term viability of the platform.
Many in the crypto space are drawing parallels between the current situation at Thorchain and the collapse of Terra in 2022. Terra’s downfall started with the failure of its algorithmic stablecoin, UST, and the network’s inability to maintain liquidity. Similarly, some analysts fear that Thorchain could be heading down a similar path.
While Thorchain’s decentralized network is still operational, and it continues to generate transaction fees, many are worried about its future. The recent pause in the THORFI service has cast doubt on the platform’s ability to maintain its operations. Some believe that the financial instability surrounding Thorchain may eventually lead to insolvency, just as it did for Terra (LUNA).
As the price of RUNE continues to drop, many investors are growing increasingly concerned. The price of RUNE has fallen by over 30% in just a few days, bringing it back to levels not seen since 2020. The RUNE/BTC trading pair has experienced a dramatic 96% drop from its all-time high in 2021, which is raising red flags for many market participants.
To make matters worse, reports indicate that the Thorchain network is running low on liquidity, with only a small amount of Bitcoin and Ethereum left in its pools. If this situation does not improve, Thorchain could find itself in a “death spiral,” where it may be forced to sell off RUNE to cover its liabilities.
Despite the concerns, there is still hope for Thorchain’s survival. The platform’s decentralized cross-chain protocol continues to process transactions, generating fees that could help restore liquidity. Additionally, Thorchain’s developers are working hard to address the current financial instability and have imposed a 90-day restriction to prevent further panic selling.
If the market can absorb the shock of this crisis and confidence returns, Thorchain may be able to weather the storm. However, if RUNE’s price continues to fall, and the platform’s liquidity issues remain unresolved, Thorchain could face a difficult future.
The coming days will be crucial for Thorchain. If the network can maintain its liquidity and avoid a larger sell-off, there may still be a chance for recovery. However, if RUNE’s price continues to spiral downward, Thorchain could face a collapse, and the crypto community may be forced to consider it a cautionary tale.
For now, the market is watching closely to see how Thorchain handles this crisis. Will the network recover and stabilize, or will it follow in the footsteps of Terra (LUNA) and face an eventual collapse? Only time will tell, but the current situation remains highly volatile and uncertain.
Thorchain’s recent pause of THORFI services has raised significant concerns about the platform’s future. The sharp decline in RUNE’s price has left many questioning whether the network can recover from this crisis. While the platform remains operational, its liquidity issues and financial instability could lead to further declines if not addressed promptly. For now, all eyes are on Thorchain as the market waits to see if it can overcome this challenge or if it will follow the path of previous crypto collapses like Terra (LUNA).
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