THORChain, a decentralized liquidity protocol, has achieved a historic milestone by surpassing $10 billion in total monthly trading volume. However, there is a divided opinion among Bitcoin maximalists regarding the platform’s safety for potential borrowers.
The official social media account for THORChain announced the achievement on March 27, with data from Runscan confirming that the protocol has reached $10.26 billion in trading volume this month.
Following this announcement, a debate ensued among Bitcoin maximalists regarding the security and potential risks for Bitcoiners who want to take out interest-free loans against their BTC using THORChain.
Mathematician and Bitcoin investor Fred Krueger expressed his confidence in THORChain, stating that he believed it to be a safe option for Bitcoiners looking to access more liquid funds. He was willing to defend this belief, even if it meant facing criticism.
However, Bitcoin analyst Dylan Le Clair disagreed with Krueger’s claims. Le Clair argued that a bitcoin collateralized loan, which relies on the exchange rate of an altcoin to offer a “0% interest no liquidation risk” loan, simply transfers the risk to the borrower.
THORChain is a decentralized liquidity protocol that facilitates the swapping of native assets across different blockchains. The protocol allows users to take interest-free loans against major cryptocurrencies like Bitcoin and Ether, without enforcing liquidations or fixed expiry dates.
In a recent upgrade on January 30, THORChain reduced the collateral requirements for Bitcoin and Ether from 400% to 200%, enabling users to borrow up to half of the total value of their provided assets.
However, analyst Chris Blec highlighted two significant concerns with THORChain’s lending model. The first is the risk of lending Bitcoin to a protocol that could potentially collapse or be exploited. THORChain had already experienced an exploit in 2021, although the funds were returned.
The second concern is relying on a centralized provider to maintain its terms and conditions, which exposes the loans to risk if changes are made.
It is worth noting that THORChain had to halt its mainnet twice in 2023 due to potential security vulnerabilities with the protocol.
In other news, the CEO of Trezor, a leading hardware wallet provider, stated that the availability of Bitcoin exchange-traded funds (ETFs) on Coinbase makes the platform an attractive target for hackers and governments seeking to gain access to users’ funds.