Unsettled Waters for THORChain as RUNE Drops Amid THORSwap Suspension

Unsettled Waters for THORChain as RUNE Drops Amid THORSwap Suspension

Time Stamp: October 6, 2023 5:35 PM
Source Node: 2921291

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Amid concerns over suspicious transactions, THORSwap, the decentralized exchange (DEX) on the THORChain network, has put a halt to its operations. This decision came in light of detected funds with potential illicit connections being transferred via the platform. Following this announcement, the token used on the THORChain network, RUNE, experienced a 14% drop and is now valued at $1.754, as per CoinGecko’s findings.

The exchange remarked, “Recently, concerns have arisen regarding the probable illicit transfers through both THORChain and THORSwap. We want to reiterate that THORSwap has zero tolerance for such actions.” THORSwap’s operations will stay suspended until enhanced security measures are in place.

Such activities have no place on the THORSwap platform, and THORSwap stands firmly against any and all criminal actions.

As per a follow-up statement, the platform stated that several features, including “LP actions, Earn, Borrow, and Staking” are still up and running. However, the timeline for the platform to completely resume remains uncertain. A THOR community spokesperson said that on the THORSwap platform, there is a staunch stand against any form of illegal activities.

The questionable transactions reportedly have connections to a hack targeting FTX in November 2022. The hacking incident led to the theft of approximately $600 million from various wallets. Arkham Intelligence, a crypto investigative agency, disclosed on September 30 that the hacker moved more than 15,000 Ethereum across different platforms, with THORSwap included in the list.

The THOR community has expressed mixed reactions to the exchange’s response. Some have drawn parallels between THORSwap’s actions and centralized exchanges shutting down without considering the community’s input. Other members have pointed to a similar situation involving Uniswap earlier in 2022. Uniswap had implemented measures to block certain wallets tied to dubious activities, managing to block 253 such addresses without stopping their exchange functions.

In the midst of this, Taylor Monahan, the founder of MyCrypto Wallet and a product manager at MetaMask, stated her prior warnings about such risks. Backing her, Eric Kryski from Bidali mentioned that he traced a considerable amount of stolen funds to Thorchain as early as July. Many community voices also expressed discontent with how the THOR team addressed the situation. Some even suggested looking to Uniswap as a model for handling similar issues, referencing their approach in April 2022 when they began barring wallets tied to unauthorized activities but continued their exchange functions uninterrupted.

What is ThorChain?

THORChain is a decentralized cross-chain liquidity protocol that allows users to swap assets between blockchain networks. It is a settlement layer that facilitates swaps between 8 chains: Bitcoin, Ethereum, Binance Chain, Avalanche, Cosmos Hub, Dogecoin, Litecoin, and Bitcoin Cash. 

Native Assets

Anyone can use THORChain to swap native assets between any supported chains. What is unique about it is that it doesn’t involve synthetic assets, or “wrapped tokens” as they are sometimes called, such as wBTC, wETH, etc. Almost all other existing solutions to this problem of swapping between different chains have the major weakness that they rely on wrapped tokens.

Using wrapped assets breaks decentralization, as these are usually issued and held by centralized exchanges and, in addition, exposes the user to many security issues. For example, when popular exchange FTX went out of business, users that relied on wrapped assets issued by the exchange lost it all.

THORChain is a non-profit organization and its team doesn’t keep any of the RUNE funds used for fees on the protocol but instead distributes all RUNE spent on fees to network participants.

Given the current low price compared to the highs of above $2, we believe it is an excellent time to get in, as the $2 is likely to be quickly broken to the upwards once the current issues are sorted out.

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