"THORChain's $200M Debt Restructure: Equity Conversion and New Token Airdrop"

THORChain, a decentralized liquidity protocol, has approved a plan to restructure its $200 million debt by converting it into equity. The platform's node operators have agreed to a proposal that aims to address liquidity issues and stabilize its operations.

In late January, THORChain suspended its lending and savers programs for Bitcoin (BTC) and Ether (ETH) to prevent an insolvency crisis. The platform also paused ThorFi redemptions for 90 days to allow the community to develop a plan to stabilize its operations. Following the pause, the THORChain community proposed various restructuring plans to ensure the network's continued operation while compensating affected users.

On February 2, the platform's node operators approved a proposal that involves converting its defaulted debt into tokens representing equity in the platform. The approved plan involves minting 200 million "TCY" tokens and airdropping them to affected users. Each token will represent $1 of the platform's debt, allowing users to claim one TCY per dollar owed.

The new token, TCY, will receive 10% of the network's revenue in perpetuity, paid out in RUNE every 24 hours, pro-rated to TCY holdings. This uncaps the upside potential for new liquidity bailing out users, and risk-averse users can sell the RUNE to any asset of their choosing every day. The THORChain treasury will create a liquidity pool allowing tokenholders to sell their claims at their own discretion, allowing creditors to exit on their own terms as market demand for THORChain's revenue materializes in the token's price.

While the protocol has set up its plan, it is still finalizing the timeline and specifics. However, some community members have raised concerns about the restructuring plan. One community member wrote on X that the plan is complicated and would require additional investment and trust in THORChain, which has "a history of mismanaging money and trust." The user said that with the plan, new capital entering is "permanently taxed."

Meanwhile, the issuance of a new token that grants holders 10% of the platform's revenue has raised concerns about whether it qualifies as an unregistered security. Another X user speculated that, as a result, THORChain could face legal action. Another community member seemed skeptical about the tokens receiving