THORChain's governance body passed a key proposal as part of restructuring efforts to resolve the debt crisis, converting defaulted debt into equity tokens.
A majority of THORChain's validators passed its governance proposal 6, indicating community consensus on how to tackle the nearly $200 million debt crisis that emerged within the protocol.
On Jan. 23, THORChain suspended its THORFi services, including “Savers and Lending” programs, due to financial uncertainties. A 90-day restructuring plan is in place to address and reduce the issues stemming from accumulated unserviceable debt in these programs.
The community-approved plan is to convert debt into equity, specifically into a new token called TCY (Thorchain Yield) with a supply of 200 million.
This means that instead of repaying loans in bitcoin or ether, lenders and savers will receive TCY tokens, effectively turning their debt claims into equity in the Thorchain ecosystem.
Holders of TCY will be entitled to 10% of Thorchain’s revenue in perpetuity. "THORChain will convert ~$200M of debt into equity through a new token that will receive 10% of network revenue in perpetuity," the team at THORChain said.
The proposal includes minting 200 million TCY tokens, distributed at a rate of 1 TCY per dollar of defaulted debt. The core team is expected to create a RUNE/TCY liquidity pool with $500,000 liquidity at $0.1 per TCY, funded by $5 million from the treasury.
This means that for those with money in Thorchain’s lending and savings programs (ThorFi), their holdings are converted into TCY rather than being repaid in the original asset — although how long it will take for recovery remains unclear.
Despite the announcement of restructuring efforts and proposal 6, RUNE experienced another price drop of 35% over the past week amid a broader altcoin sell-off, going from $2 to $1.3 at the time of writing, according to The Block's price page. The token has shed over 70% of its value in the past 30 days.
Despite these challenges, the network has maintained swap volume, processing $270 million in the last 24 hours.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
