The RUNE protocol is in trouble as the token value continues to plummet and the news of proposal 6 being passed by super-majority. “get users liquid again?”
THORChain ‘death spiral’
CryptoSlate published a report on the 24th of January that THORChain has suspended Bitcoin withdrawals and Ethereum savings within its lending programs and savings program after receiving reports about a $199m liability. As the community awaited a restructuring plan to address the protocol’s debts and ensure its long-term viability, RUNE had dropped nearly 30% in value to $1.90. By the time we wrote this, RUNE’s value had dropped by a further 30% to $1.90.
“If only someone could have seen this coming,” Sunny Aggarwal is the co-founder and CEO of Osmosis. “obviously” rolling eyes emoji.
Crypto educator @CosmosHoss commented, “Looks like [Aggarwal] called the THORChain RUNE death spiral long before it happened—but most ignored him.”
Adding fuel to the fire, founder John-Paul (‘JP’) Thorbjornsen has come under intense scrutiny for potential conflicts of interest and activity managing multiple projects. TB, a core THORChain contributor and influential node, was also screenshotted and posted on X, revealing that he sold his RUNE despite trying to protect the protocol.
“I couldn’t identify the next buyer and validators were going to be selling,” he added, “There’s a bunch of validators that are going to sell. I’m not going to stand there like a dumbass.”
Since then, 26 more nodes (around 20 percent of the network) have followed suit. This signals an intention to depart and corresponds to around 20 million RUNE that are potentially preparing to be dumped on the market.
A solution to ‘get users liquid again’
Despite its internal struggles and a growing clamor of naysayers’ attempts at “fudding it to zero,” THORChain members are committed to their community. Thorbjornsen, who has posted repeatedly on X to reassure his conviction via posts such as “GM, not going anywhere,” Supporters like ShapeShift CEO Erik Voorhees, an industry OG and former CEO of ShapeShift insist on staying neutral. “ardent supporter.”
As the THORChain team works around the clock to turn the tide of fortune of the troubled protocol, the community unanimously voted in favor of a proposal to ‘get users liquid again’ and convert defaulted debt to $TCY equity with no private raise. “Proposal 6 passed by super-majority. Nodes stepped in to provide certainty and a way forward,” posted Thorbjornsen.
In perpetuity, 10% of all fees would be distributed in TCYs to the affected users. The plan is designed to increase capital efficiency and bring new liquidity into the protocol. It aims to improve THORChain by writing off debts and rewarding DLPs and nodes that remain with the protocol. “great and boring again.”
The coming days and weeks will reveal how THORChain navigates this critical time—and whether it can avoid dropping into the abyss of failed crypto projects.
The Crypto, Featured section is where you will find this post. The Author 
Christina Comben
Christina is web3’s writer, content manager, and editor. She has a passion to start important discussions and write about technology. She’s an industry veteran who isn’t phased by the volatility of markets and often scrimps at Starbucks for BTFD.
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