THORChain, a decentralized finance (DeFi) platform, has paused its network due to excessive debt and leverage issues. The platform owes nearly $200 million in ecosystem debt, which occurs when a blockchain owes more tokens than it holds. Leverage risk has also contributed to the financial imbalance, as users borrow against their crypto assets and face the potential for massive losses. This situation has led to a loss of confidence in THORChain, causing its native token, RUNE, to plummet in value by over 40%. THORChain is currently voting on a restructuring plan to stabilize the system and regain users' trust. Efforts include removing risky features and integrating with popular wallets to ensure liquidity. The incident highlights the need for streamlined designs and effective risk management systems in DeFi lending to avoid such financial imbalances.



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