Thorchain, a decentralized finance (DeFi) protocol, is currently grappling with a massive $200 million insolvency crisis. The network recently paused its savers and lending programs, affecting users' ability to withdraw funds. Approximately $111 million in digital assets are locked up in the protocol, including significant amounts in Bitcoin and Ethereum. The protocol's operator, in a bid to stabilize the situation, referred to this as a 'bankruptcy freeze' while seeking a restructuring plan within 90 days. The inherent challenge lies in the fact that Thorchain meets its lending obligations by minting its native token, RUNE, which has inflated its supply and decreased its market value. Experts within the community have expressed concern over the solvency and sustainability of Thorchain, suggesting that if the situation is not managed effectively, it could result in irreversible damage to the protocol. Despite these challenges, some advocates see the value in salvaging the project, citing its significance in the DeFi ecosystem and past financial performance.

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