-->The decentralized liquidity protocol THORChain has managed to achieve a trading volume of 10 billion dollars in one month for the first time in history. Despite that success, Bitcoin maximalists are divided over the platform’s safety for users risking their capital.

In a tweet dated February 27, THORChain proudly wrote about the milestone with data from Runscan showing a trading volume of $10.26 billion for this month.

Not everyone is positive about THORChain

In a series of commentaries and publications, a debate then broke out among bitcoin maximalists about the security and potential dangers posed by THORChain.

It all started with mathematician and bitcoin investor Fred Krueger who indicated he is “willing to take the blame” because he sees value in THORChain; meaning he says bitcoin loans on the protocol are safe for bitcoiners looking to liquefy their assets.

However, the popular Dylan LeClair would have none of that. “A bitcoin-backed loan that relies on the price of an altcoin to offer you 0% interest without liquidity risk is simply a conversion of risk,” LeClair wrote.

We have seen similar platforms in the past and each time they proved unable to cope with market developments. In that regard, Dylan LeClair seems to be right here.

Collateral reduced from 400 to 200 percent

As part of the platform’s most recent upgrade, it was decided to reduce the collateral requirements for Bitcoin and Ethereum from 400 to 200 percent. Since then, users have been able to borrow half the value of the assets they contributed.

Popular analyst Chris Blec calls THORChain “interesting”, but also sees two dangers in the concept.

The first danger is that investors take the risk of lending their bitcoin to a protocol that could collapse or fall victim to a hack; which in the case of THORChain has already happened in 2021.

Secondly, there is the danger that investors will rely on a centralized provider, who could in principle change the conditions at a later time.

Here it is important to mention that THORChain was forced to shut down its blockchain twice in 2023, due to potential weaknesses in the protocol’s security.

Source: https://bitcoinmagazine.nl/nieuws/bitcoin-leenplatform-thorchain-pakt-voor-het-eerst-maandvolume-van-10-miljard

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