The Critical $RUNE Situation Thorchain has two key products: a Cross-Chain DEX that offers cross-chain swaps between Bitcoin and EVM networks (ETH, Base, BNB) and a lending protocol called ThorFi, which allows Bitcoiners to borrow stables and other assets at a 0% interest rate with no liquidation. ThorFi was designed with the most optimal scenario where $RUNE price would outperform Bitcoin and Ethereum, leading more people to borrow $RUNE against BTC and ETH when it was first introduced in Aug'23. $RUNE outperformed Bitcoin by 4x between Sep'23 and March'24, with the price going up 10x, creating more demand for loan creation. More loan creation led to burning more $RUNE, which ended up generating more hype for the token. The flywheel was supposed to work well as long as there was more demand for loan creation than loan closure. However, it was expected to break when $RUNE underperformed against BTC for a prolonged period, leading depositors to withdraw their synthetic BTC from saver pools, which were accruing yield from protocol revenue and liquidity rewards. Withdrawals from savers would require buying BTC by selling $RUNE to return their BTC. Since $RUNE dropped by 75% while Bitcoin went up 150% in the past 12 months, depositors started withdrawing their BTC, and more borrowers closed their loans, leading to more $RUNE supply being minted and additional sell pressure from savers. As a result, the Thorchain core team decided to halt the ThorFi lending product for the next three months to stop withdrawal requests from savers, as fulfilling those requests would further worsen the $RUNE price situation. The token is now trading at $2.2, its lowest level since Oct'23. Thorchain is working with a few core contributors to figure out a restructuring plan to clear $200M worth of debts ($140M in BTC) on the protocol and pay back savers and lenders. There are early proposals under discussion, including cutting block rewards to manage token inflation, launching tokenized protocol-owned debt, using 25% of protocol revenue to unwind debts, retiring ThorFi, and more. I think they will come up with a solid plan soon that might get passed through governance. Since Thorchain's DEX volume is still growing, running at a $30M ARR, we could expect something positive. However, it's also important to acknowledge that they are in a deep mess that will take time to clean up.