THORChain protocol halts operations due to large debts

The DeFi liquidity protocol for asset swaps, THORChain, has suspended operations due to significant debt and leverage issues, according to Blockbeats.

Reports indicate that THORChain has outstanding loan obligations amounting to $97 million and a debt to depositors of $102 million. The issue arose from substantial Bitcoin borrowing when digital asset prices were significantly lower than they are now. To cover these liabilities, additional RUNE tokens would need to be issued.

The financial imbalance has pushed the protocol to the brink of bankruptcy. To prevent this, the project's community is exploring a 90-day restructuring plan aimed at stabilizing the THORChain ecosystem and restoring user confidence.

News of insolvency has impacted RUNE, which has dropped by more than 30% in the past 24 hours.