The decentralized liquidity protocol THORChain has achieved a significant milestone, surpassing $10 billion in total monthly trading volume for the first time. However, the platform's safety for potential borrowers, particularly Bitcoin maximalists, remains a topic of debate.
Record Trading Volume:
THORChain announced the milestone in a post on March 27, with Runscan data showing a total monthly trading volume of $10.26 billion. This achievement marks a historic moment for the decentralized liquidity protocol.
March 2024 was the first month in THORChain history with over $10b in trading volume 🎉
— THORChain (@THORChain) March 27, 2024
A major win for DEXs, but the goal is unambiguously to flip the volume and liquidity of centralized exchanges.
Bitcoin liquidity will live natively, on-chain. Onwards pic.twitter.com/7OsxsErGaK
Bitcoin Maximalists' Concerns:
Despite the milestone, some Bitcoin maximalists are cautious about using THORChain for borrowing against their BTC. Mathematician and Bitcoin investor Fred Krueger expressed confidence in THORChain's safety, but Bitcoin analyst Dylan Le Clair raised concerns about the risks involved.
Safety and Risk:
Le Clair highlighted the risk of depending on an altcoin's exchange rate for a Bitcoin-collateralized loan, describing it as "shorting a tail that you don’t know how to quantify." THORChain offers interest-free loans against major crypto assets like Bitcoin and Ether without enforcing liquidations or fixed expiry dates.
Protocol Upgrades and :
THORChain recently reduced collateral requirements for Bitcoin and Ether from 400% to 200%, allowing users to borrow up to half the total value of their assets. However, the protocol faced challenges in 2021, including halting its mainnet twice due to potential security vulnerabilities.
Conclusion:
THORChain's achievement of $10 billion in monthly trading volume demonstrates its growing significance in the decentralized finance (DeFi) space. However, the debate among Bitcoin maximalists underscores the importance of safety and risk management in DeFi platforms.
A bitcoin collateralized loan that is dependent on the exchange rate of an altcoin to offer you a ‘“0% interest no liquidation risk” loan is simply transmuting the risk.
— Dylan LeClair 🟠 (@DylanLeClair_) March 25, 2024
You are shorting a tail that you don’t know how to quantify.
