Thorchain, a decentralized finance (DeFi) protocol, has encountered a severe financial crisis, confronting approximately $200 million in toxic debt. The protocol recently paused its savers and lending programs, rendering users unable to withdraw their digital assets. In total, about $111 million is currently locked within Thorchain’s platform, which includes significant amounts of Bitcoin and Ethereum. With reports of insolvency, Thorchain's community faces a critical situation, as any attempt to redeem liabilities exceeds the network's sustainable capacity. The recent decision to freeze withdrawals was made collectively by network validators, as a drastic measure to stave off a complete collapse while seeking a restructuring plan within a designated timeframe. The native token RUNE has seen significant depreciation, losing 29% of its value following the insolvency news. Despite these setbacks, some community members, including prominent stakeholders, express confidence in Thorchain's recovery potential, citing its robust earning capabilities and previously achieved milestones in the crypto ecosystem.

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