THORChain has taken a decisive step to address its financial difficulties by approving the issuance of equity tokens to manage nearly $200 million in outstanding debt. The decision, formalized through the approval of “Proposal6,” will see the introduction of a new token, TCY (Thorchain Yield), with a total supply of 200 million tokens.

The move follows the suspension of THORFi services on January 23 due to financial uncertainty, as previously reported by CoinDesk. By converting defaulted debt into equity, the protocol aims to stabilize its ecosystem while offering a path to financial recovery.

TCY tokens will be allocated at a rate of one TCY per dollar of defaulted debt, effectively transforming lenders and savers into equity holders. As part of this strategy, THORChain plans to establish a liquidity pool for RUNE/TCY with an initial $500,000, pricing TCY at $0.10 per token. This initiative will be backed by $5 million from the project’s treasury, reinforcing confidence in the new token’s viability.

Holders of TCY will benefit from 10% of THORChain’s revenue indefinitely, serving as a long-term compensation mechanism for those affected by the debt crisis. However, the timeline for complete financial recovery remains uncertain, as the protocol navigates ongoing market fluctuations.

Despite the debt restructuring, THORChain’s core cross-chain swap functionality remains fully operational. Meanwhile, the platform’s native token, RUNE, has faced significant losses, dropping 10% in the last 24 hours amid a broader market downturn. Over the past 30 days, RUNE’s value has declined by nearly 50%, reflecting the ongoing volatility in the cryptocurrency sector.

As THORChain moves forward with this restructuring plan, the success of TCY and its integration into the ecosystem will be closely watched by investors and market participants alike.