THORChain's Bold Move: $200M Debt to Equity Swap

THORChain, a decentralized exchange (DEX) platform, has announced a strategic move to combat its $200 million debt crisis. The platform has proposed "Proposal 6," which aims to convert nearly $200 million of unserviceable debt into equity via a new token, TCY (Thorchain Yield). The total supply of TCY tokens will be 200 million.

This decision comes after THORChain suspended its THORFi services on January 23 due to financial uncertainties. The TCY tokens will be distributed at a rate of 1 TCY per dollar of defaulted debt, effectively turning lenders and savers into equity holders. THORChain plans to establish a RUNE/TCY liquidity pool with an initial funding of $500,000 at $0.1 per TCY, using $5 million from the treasury.

Holders of TCY will receive 10% of THORChain's revenue indefinitely, providing a long-term incentive and recovery mechanism for those affected by the debt crisis. However, the timeline for total financial recovery remains uncertain. Despite the debt crisis, THORChain's cross-chain swaps, its main service, remain unaffected.

The prices of the platform's native RUNE token have fallen by 10% in the past 24 hours, extending 30-day losses to nearly 50%. This decline is part of a broader market fall, reflecting the current state of the cryptocurrency market.