THORChain's Debt Restructuring: A Comedy of Errors or a Financial Masterpiece?

In a world where decentralized liquidity protocols frolic like sheep in a meadow, THORChain’s node operators have decided to take a bold leap into the unknown—like a cat jumping off a high shelf, only to realize it forgot how to land. They’ve approved a proposal to transform their defaulted debt into something resembling equity, which is a bit like turning a pumpkin into a carriage, but with more spreadsheets and fewer fairy godmothers. 🎃✨

On the fateful day of January 23, THORChain, in a move that could only be described as “sensible,” suspended its lending and savers programs for Bitcoin (BTC) and Ether (ETH). This was done to prevent an insolvency crisis, which is a fancy way of saying they didn’t want to end up like a deflated balloon at a children’s party. 🎈

In a bid to keep the ship afloat, the platform paused ThorFi redemptions for a whopping 90 days. This gave the community ample time to devise a plan that would stabilize operations, or at least come up with a good excuse for why they were in this mess in the first place.

Fast forward to February 2, and the community, in a fit of collective genius, proposed a plan that involved minting 200 million “TCY” tokens. These tokens would be airdropped to affected users, like confetti at a wedding, but with slightly less joy and a lot more financial implications. Each token would represent $1 of the platform’s debt, allowing users to claim one TCY per dollar owed. It’s like getting a coupon for a discount on your own misfortune! 🏷️

Converting $200 million in debt into equity

The approved plan is as follows: mint 200 million TCY tokens and airdrop them to the users who are still brave enough to hold on. Each token will represent a dollar of debt, which is a bit like giving someone a shiny new toy to distract them from the fact that they’re still in debt. 🎁

According to the plan, the new token will receive 10% of the network’s revenue in perpetuity. Yes, you heard that right—perpetuity! It’s like a never-ending buffet, but instead of food, you get a slice of the revenue pie. 🍰

“TCY gets 10% of fees in perpetuity paid out in RUNE every 24 hours pro-rate to TCY holdings, like $MAYA, uncapping upside potential for new liquidity bailing out users. Risk-averse users can sell the RUNE to any asset of their choosing every day.”

Furthermore, the THORChain treasury would create a liquidity pool, allowing tokenholders to sell their claims at their own discretion. It’s like a yard sale, but instead of old toys, you’re selling your financial future. 🏷️

While the protocol has set up its plan, it is still finalizing the timeline and specifics. Because who doesn’t love a good cliffhanger?

Community members disagree with the restructuring plan

However, not everyone is on board the THORChain express. Some community members have raised concerns, which is a polite way of saying they’re not buying what THORChain is selling.

One particularly vocal community member took to X to express their skepticism, stating that the restructuring plan is as complicated as a Rubik’s Cube in the hands of a toddler. They pointed out that it would require additional investment and trust in THORChain, which has a history of mismanaging money and trust—like a cat with a laser pointer. 🐱

Meanwhile, the issuance of a new token that grants holders 10% of the platform’s revenue has raised eyebrows about whether it qualifies as an unregistered security. Another user speculated that THORChain could face legal action, which is always a fun game of “What Could Go Wrong?”

Another community member seemed unconvinced about the tokens receiving revenue in perpetuity, suggesting it would only last until the platform changes its mind—like a child who promises to share their candy but then eats it all

2025-02-04 14:15

THORChain’s Debt Restructuring: A Comedy of Errors or a Financial Masterpiece?

Converting $200 million in debt into equity

Community members disagree with the restructuring plan

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