The atebites X Twitter account highlighted that THORChain’s lending service Currently, the country does not have enough Bitcoin to pay its debts.
The total bitcoin amount to be returned to the depositors at the time the article was published, was 1,604, but the pool of lending only contained 592 bitcoin.
Thorchain’s lending situation is so bad that it poses a serious risk to its protocol.
At the current RUNE mark-to-market rates, a complete loan closing will earn 24 million RUNE.
1,604 in BTC collateral, 18,258… pic.twitter.com/OykZbMQCdx
— atebites (@ate_bites) January 8, 2025
You can also read about the advantages of using Lava founder Shehzan Maredia In a recent post, X explained that when you lend on THORChain they will sell your bitcoin as collateral in exchange for RUNE, their token. They sell RUNE to you in exchange for bitcoin when you pay back the loan.
Thorchain’s collapse was predicted in 2023. "lending" feature, and it's happening now. People never seem to understand that any cryptosystem which is susceptible to failure will also fail.
When you borrowed on Thorchain, they would sell your BTC collateral for their…
— Shehzan (@MarediaShehzan) January 10, 2025
The mechanics are a little more complicated and detailed on THORChain’s website. You can see screenshots below.
According to atebites, the primary problem in this scenario stems from the fact that bitcoin was trading at a much lower price than it does today.
For THORChain, this means minting upwards of 24,000,000 RUNE as of 8th January. Although this is only about 8%, it would still be a significant amount. the circulating supply of RUNE. It would result in a decrease in the value of the asset. This would reduce THORChain’s purchasing power when they tried to purchase bitcoin on behalf of creditors.
If traders short RUNE, THORChain’s ability to acquire the necessary amount of bitcoins to repay its creditors will be further diminished.
It could be a similar situation to what happened in Terra/Luna death spiral We saw 2022.
You may wish to withdraw the bitcoins that you put as collateral through THORChain’s loan service, just in case.
The article below is an overview of the topic. Take. Opinions are solely those of the author and may not reflect BTC Inc.
“This article is not financial advice.”
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Source: bitcoinmagazine.com
