Tuesday, September 27, 2022

Crypto miner Poolin to issue IOU tokens to users amid withdrawal freeze

As part of its efforts to, at least, ease the burdens of its users, crypto miner Poolin has announced it will be issuing IOU tokens. The Bitcoin mining pool shared the news via a Tuesday blogpost with claims that its decision will help “minimize the impact of withdrawal suspension” on users.

Poolin releases IOU tokens to squash liquidity issues

In the post, Poolin said its wallet service — the PoolinWallet will issue six IOU tokens to users affected by the withdrawal freeze on its platform. That is, users who do not have access to their Bitcoin (BTC), Ether (ETH), Tether (USDT), Litecoin (LTC), Zcash (ZEC) and Dogecoin (DOGE) holdings. Recall that withdrawals were earlier halted due to liquidity issues.

According to the announcement, however, from September 15, the mining pool will issue IOUBTC, IOUETH, IOUUSDT, IOULTC, IOUZEC and IOUDoge. And each IOU token will be issued at a 1:1 ratio based on users’ original holdings before the freeze.

Furthermore, says that after issuing the IOUs, users will now have the number of original tokens in their assets and mining accounts set back to zero. But they can choose to withdraw their IOU tokens at any time. However, the platform says it will eventually burn all the IOUs. That is after the users must have traded them back for their original tokens.

From all indications, Poolin, like many other firms having similar liquidity issues, is exploring all possible solutions. These include seeking investments, assets sellout, as well as debt-equity swaps. The platform says:

“Our priority, for the time being, is to resume withdrawals of as many coins/tokens as possible.”

It might be worth noting that Poolin’s approach is not exactly a new one. Many other platforms have also had to resort to releasing IOU tokens in the past. Especially when they are faced with similar liquidity problems as Poolin is currently experiencing.

For instance, DeFi protocol Furucombo lost $15 million to an exploit in 2021. And in a similar move, it also issued 5 million iouCOMBO tokens to compensate victims on its platform.

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