THORChain Passes Proposal to Convert $200M Debt Into Equity Tokens

THORChain’s community has voted in favor of Proposal 6, a key step in resolving the protocol’s nearly $200 million debt linked to its Savers and Lending programs.

The plan centers on converting the defaulted debt into Thorchain Yield (TCY) equity tokens, avoiding the need for a private fundraising round. Instead, the protocol will tap into existing treasury funds to support the recovery effort.

As outlined, 200 million TCY tokens will be minted and distributed to affected users at a rate of 1 TCY per $1 of defaulted debt. These tokens will receive 10% of protocol fees indefinitely, providing long-term value to users and aligning their interests with the protocol’s future.

To stabilize pricing, a RUNE/TCY liquidity pool will launch at $0.10 per TCY, and $5 million in treasury funds will be used to conduct strategic buybacks over the next 10 weeks.

The proposal also includes the introduction of Liquidity Nodes, aimed at increasing capital efficiency and encouraging stronger governance participation from liquidity providers.

By converting debt into equity rather than minting more RUNE, THORChain maintains its solvency and offers impacted users a potential path to recovery.

This governance decision follows the suspension of THORFi services on January 23, a move taken in response to mounting financial concerns. While trading and swap features remained functional, lending was paused, and a 90-day restructuring plan was launched.

During this period, community members proposed eight separate recovery plans. Proposal 6 emerged as the consensus solution, ultimately approved by validator node operators.

Since early December, THORChain’s native token RUNE has experienced a steep decline—dropping nearly 80%. Following the suspension of THORFi, the token continued its downward trajectory and is currently trading at $1.21, despite occasional signs of stabilization.