RUNE, the native token of the ThorChain ecosystem, is witnessing a huge sell-off as whales dump their positions amid concerns that the project is insolvent and will be officially declare bankrupt on Monday.
An insider told Crypto Intelligence News on Saturday that ThorChain will declare insolvency on Monday, causing the value of RUNE to crash to $0.00, in a meltdown similar to the Terra-Luna crash.
“Validators have voted to leave the network and insiders and whales are already selling all of their RUNE,” the insider said.
“ThorChain will publicly declare insolvency on Monday, after insiders have finished selling off their positions.”
RUNE is currently trading at around $1.53 per token on Binance, and it is predicted to fall below $0.80 before the end of Saturday.
The token has already plunged by over 20% so far today, as investors dump their positions to avoid losing all of their investment before RUNE becomes worthless.
Why is Rune About to Collapse?
In January, THORChain, a decentralized cross-chain liquidity protocol, faced a significant crisis due to its controversial lending program. The platform had accumulated approximately $200 million in liabilities, primarily in Bitcoin (BTC) and Ethereum (ETH), through its lending and savers programs. This substantial debt raised concerns about the protocol’s solvency, as it lacked sufficient assets to cover these obligations.
To address the mounting insolvency risks, THORChain’s node operators decided to suspend withdrawals from the lending and savers products for 90 days. This pause aimed to stabilize the ecosystem and provide time to develop a restructuring plan.
Despite these measures, the platform’s native token, RUNE, experienced a significant decline, dropping approximately 44% in value within a week. This decline exacerbated concerns about the platform’s financial health and drew parallels to the Terra/Luna collapse of 2022.
The crisis highlighted vulnerabilities in THORChain’s economic model, particularly its reliance on RUNE for its lending mechanism. When loans are repaid, RUNE is minted, which can lead to inflationary pressures, especially if RUNE underperforms against BTC and ETH.
No information published in Crypto Intelligence News constitutes financial advice; crypto investments are high-risk and speculative in nature.
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