Two days ago, the atebites X account pointed out that THORChain’s lending service currently has nowhere near enough bitcoin to repay its creditors.
As As of the date of this post, there were only 592 bitcoins in the lending pool.
As Lava The following are some of the most common questions asked by those who seek to understand how they can best help others. Shehzan Maredia As explained in a blog post by X, if you want to borrow money on THORChain you can sell your bitcoin as collateral and get their RUNE token. When You repay your loan and they exchange your RUNE for Bitcoin to return your collateral.
The actual mechanics of how this works are a bit more complex and are detailed on THORChain’s website. See Below are screenshots of the site:
The According to atebites the main issue with this scenario is the fact that Bitcoin was trading at significantly lower rates than it does today.
This To meet the current demand, THORChain will have to mint 24,000,000 RUNE. January 8). While This would be only 8% of RUNE’s circulating supply, but it would result in a drop in price, giving THORChain less buying power when they tried to purchase bitcoin on behalf of creditors.
If traders were to start shorting RUNE on top of this, THORChain’s ability to purchase the required amount of bitcoin to redeem its creditors would diminish even further.
This Could lead to a situation similar to Terra/Luna Death spiral in 2022
Therefore, even though it isn’t a given that this situation will end in disaster, you may want to redeem the bitcoin you’ve put up as collateral via THORChain’s lending service just in case.
This The article is also known as Take. Opinions expressed are entirely the authThe following are some examples of how to use's and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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