THORChain initiates a new proposal to burn $300 million worth of RUNE to expand lending capacity

ChainCatcher news, THORChain has proposed a new improvement proposal (ADR 012) on its official GitLab page, aimed at expanding THORFi's lending business and burning the reserve. According to the proposal, since the launch of the lending business in the third quarter of 2023, a total of 1,300 loans have been opened, involving approximately $24 million in collateral, used to issue $7 million in debt. Currently, the system risk is low, and in a complete liquidation scenario, only 700,000 RUNE will be permanently destroyed.

The proposal suggests setting the maximum collateral rate (MAXCR) at 200% and burning 60 million RUNE of the reserve. This initiative aims to reduce lending risks and safely increase lending leverage. Lowering the MAXCR to 200% will allow for more loans to be issued, and the likelihood of loan closures during a bear market will decrease. Additionally, by burning approximately $300 million worth of RUNE, THORChain can absorb an additional $100 million in collateral, increasing market demand for RUNE.

The proposal also mentions that burning the reserve not only creates space for the expansion of the lending business but also helps in the future launch of new features such as stablecoins and perpetual contracts.