The decentralized liquidity protocol reported record-breaking monthly trading volume in March, even as certain Bitcoin maximalists express concerns about utilizing the protocol for borrowing

THORChain, the decentralized liquidity protocol, has achieved a historic milestone by surpassing $10 billion in total monthly trading volume for the first time. Nevertheless, the debate among Bitcoin (BTC) maximalists remains divided regarding the platform’s safety for potential borrowers.

On March 27, THORChain’s official social media account announced the achievement, with data from Runscan indicating a total volume of $10.26 billion for the month.

This announcement sparked a discussion among Bitcoin maximalists regarding THORChain’s security and the potential risks for individuals seeking interest-free loans against their BTC through the platform.

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Mathematician and Bitcoin investor Fred Krueger expressed confidence In THORChain, stating that he believed it to be a secure option for Bitcoiners seeking liquidity. However, Bitcoin analyst Dylan Le Clair contested Krueger’s assertion, arguing that BTC-backed loans reliant on an altcoin’s exchange rate for offering “0% interest no liquidation risk” loans simply shift the risk rather than eliminate it.

THORChain operates as a decentralized liquidity protocol facilitating native asset swaps across blockchains. It offers interest-free loans against major crypto assets like Bitcoin and Ether (ETH) without imposing liquidations or fixed expiry dates. Following the protocol’s Jan. 30 upgrade, collateral requirements for Bitcoin and Ether were reduced from 400% to 200%, enabling users to borrow up to half the total value of their provided assets.

Analyst Chris Blec described THORChain’s no-liquidation lending model as intriguing but highlighted two significant concerns. Firstly, investors assume the risk of lending their Bitcoin to a protocol that could potentially collapse or be exploited, as occurred in 2021, although the funds were eventually returned. Secondly, investors rely on a centralized provider not altering its terms and conditions in the future, thereby exposing their loans to risk.

It’s noteworthy that THORChain experienced two mainnet halts in 2023 due to reports of potential security vulnerabilities with the protocol.