While cryptocurrencies displayed gains on Friday, the THORChain community welcomed negative news, which saw RUNE decoupling with substantial losses on its 24-hour chart.
DeFi platform halted its lending site THORFI, potentially due to financial instability due to emerging bankruptcy allegations.
Breaking News !
@THORChain pauses THORFi services and
enforces 90-day restructuring to address financial challenges.
Hence the price of $RUNE has dropped by 32.0%, and it is currently trading at $2.10, Due to the news….
what is your opinion
Do you think is a good move
THORChain paused THORFI operations due to massive debt and leverage challenges that have pushed it on the verge of insolvency.
Blockbeats highlights that the site owes about $200 million in debt, $102 million in synthetic and savers, and $97 million in lending liabilities.
The significant financial imbalance has the DeFi platform staring at bankruptcy.
In that context, ecosystem debt happens when a DeFi network owes more coins than it has, similar to THORChain’s current issue.
The financial imbalance often results from fund mismanagement and exaggerated promises to depositors.
Meanwhile, leverage risks emerge when investors use their tokens as collateral when borrowing to enhance their positions.
While this can increase returns, leverages can attract massive losses, triggering liquidations.
Platforms like Traze offer trading capabilities, enabling users to explore DeFi opportunities, though risk management remains essential in volatile markets.
THORFI challenges began when Bitcoin and Ethereum borrowings soared while BTC and ETH prices were lower.
That forced the blockchain to mint more RUNE tokens.
However, faded liquidity on the platform magnified the woes, triggering significant price dips.
Reports show THORChain has suspended the lending network to thwart panic selling that might destabilize the blockchain.
Also, validators might have imposed the operations halt to discuss a restructuring plan.
While the platform has enforced a three-month restrictive initiative, prevailing financial instability has triggered concerns about THORChain’s future.
While some market players remain optimistic as “only THORFI is paused,” some trust THORChain is on Terra’s (LUNA) path, heading for a massive disaster.
THORChain mirrors Terra (LUNA)
THORChain faces bankruptcy allegations, with some believing the blockchain is on a deathbed.
RUNE/BTC has plunged 97% from 2021 highs, signaling a massive bearish wave.
THORChain will have to mint and sell RUNE at a loss when borrowers begin repaying loans.
Analysts highlight that the blockchain has less BTC and ETH in its pools.
Thus, the upcoming sessions remain vital for THORChain, RUNE, and their entire cryptocurrency market.
Continued RUNE/BTC dips could see THORChain facing a LUNA-like crisis. That will mean massive price dips for the native coin RUNE.
RUNE price outlook
The altcoin trades at $2.32, with a 24-hour high and low of $3.1478 and $1.997.
The nearly 120% surge in daily trading volume likely reflects magnified activity from sellers.
Massive developer efforts remain crucial to diminish the emerging FUD and absorb the prevailing shock waves in the market.
TCB trusts THORChain has only two options, which will destroy its image in the cryptocurrency sector.
Thorchain has two options :
1. Let things continue and about 5-7% of the value will be extracted by a handful of people exiting first, $rune will go on a downward spiral and @THORChain will be destroyed
2. Default on the debt, go bankrupt and salvage the valuable part, and try…
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