THORChain, the decentralized liquidity protocol, has achieved a historic milestone by surpassing $10 billion in total monthly trading volume. However, there is a division among Bitcoin maximalists regarding the safety of the platform for potential borrowers.
On March 27, THORChain’s official social media account announced the milestone, supported by data from Runscan, which showed that the protocol has achieved $10.26 billion in trading volume this month.
Following this announcement, a debate emerged among Bitcoin maximalists regarding the security and potential risks for Bitcoin users seeking interest-free loans using THORChain.
Bitcoin investor Fred Krueger, in a post on March 27, expressed his confidence in THORChain, stating that he believes it to be a safe option for Bitcoiners looking to access liquid funds through BTC-backed loans. He acknowledged that this declaration may invite criticism.
However, Bitcoin analyst Dylan Le Clair challenged Krueger’s claims, arguing that relying on the exchange rate of an altcoin for a collateralized loan introduces additional risks.
THORChain is a decentralized liquidity protocol that enables native asset swaps across different blockchains. The protocol allows users to obtain interest-free loans using major cryptocurrencies such as Bitcoin and Ether, without the risk of liquidation or fixed expiry dates.
In its most recent upgrade on January 30, THORChain reduced the collateral requirements for Bitcoin and Ether from 400% to 200%, allowing users to borrow up to half of the value of their provided assets.
Analyst Chris Blec described THORChain’s lending model without liquidation as “interesting,” but highlighted two major concerns. Firstly, investors face the risk of lending their Bitcoin to a protocol that could collapse or be exploited. Secondly, investors rely on a centralized provider to maintain consistent terms and conditions, which exposes their loans to potential risks.
It is worth noting that THORChain experienced two mainnet halts in 2023 due to reports of security vulnerabilities with the protocol.
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