TL;DR
- THORChain is addressing its $200 million debt by issuing a new token called TCY, converting defaulted debt into equity.
- TCY token holders will receive 10% of THORChain’s revenue in perpetuity, aligning their interests with the protocol’s long-term growth.
- Despite recent price volatility, THORChain aims to stabilize its financial situation and provide creditors with a stake in its future success through this innovative approach.
THORChain is facing a significant financial challenge with nearly $200 million in debt. To address this crisis, the THORChain governance body has approved a proposal to convert the defaulted debt into equity by issuing a new token called TCY. This innovative approach aims to stabilize the protocol’s financial situation and provide a path forward for creditors.
THORChain Community Update
Thank you to the community members, Node Operators, and builders who have remained committed throughout this critical moment for the network. Your dedication and contributions have been invaluable in shaping the path forward and ensuring THORChain’s…— THORChain (@THORChain) February 2, 2025
Details of the TCY Token
The TCY token will be issued to creditors at a rate of 1 TCY per dollar of defaulted debt, with a total supply of 200 million tokens. Holders of TCY tokens will be entitled to 10% of THORChain’s revenue in perpetuity, effectively turning their debt claims into equity within the THORChain ecosystem.
This move is designed to provide creditors with a stake in the protocol’s future success, aligning their interests with the long-term growth of THORChain.
Implementation and Market Impact
The implementation of the TCY token involves several key steps. First, the THORChain team will create a RUNE/TCY liquidity pool with $500,000 liquidity at $0.1 per TCY, funded by $5 million from the treasury.
This liquidity pool will facilitate trading and provide initial support for the TCY token’s value. Additionally, the protocol has suspended its THORFi services, including “Savers and Lending” programs, to focus on restructuring and addressing the debt crisis.
Despite the announcement of the restructuring efforts, THORChain’s native token, RUNE, has experienced significant price volatility. Over the past week, RUNE’s price has dropped by 35%, falling from $2 to $1.3.
This decline reflects broader market concerns and the challenges faced by the protocol. However, THORChain has maintained swap volume, processing $270 million in the last 24 hours, indicating continued user engagement and activity.
THORChain’s plan to tackle its $200 million debt crisis through the issuance of the TCY token represents a bold and innovative approach to financial restructuring. By converting debt into equity, the protocol aims to stabilize its financial situation and provide creditors with a stake in its future success.
