I have proposed my solution for unwinding @THORChain lending positions without minting any new $RUNE and also offering borrowers two different ways to exit positions immediately.

Here's how it works:

1) Create a module called the 'Discount Auction Module'.
2) Tokenize all borrower positions via snapshot of BTC/ETH value at the time of snapshot.
3) Divert 10% of system income to the Discount Auction Module.
4) Once per day, if the DAM has over a certain amount of $RUNE an auction goes live.
5) Any holder of a tokenized borrowing position can 'bid' to close their loan using the liquidity in the DAM. The larger the discount they are willing to accept, the higher their bid.
6) If at any point the DAM has enough RUNE to close out all remaining loans, it does so immediately.

Pros:
- If you want to exit your borrowing position immediately you have two options, bid at the DAM or sell your tokenized position p2p.
- If you want all your collateral back, all you need to do is wait.
- As more people use the DAM to exit at a discount, remaining liabilities are decreased for less RUNE than we would have had to spend were they not closed at a discount.
- No circulating supply inflation necessary. All exits of lending positions are funded via system income or a private bidder.
- Incentives are aligned. Borrowers will be motivated to have the protocol process more volumes to repay loans faster, NOs/LPs/token holders do not have to be worried about dilution from inflation of circulating supply of $RUNE.
- Unwind is guaranteed to be healthy. No death spiral possible.

Cons:
- Some reduction in rewards paid to LPs/NOs. (this can be reduced by using the 5% burn for the DAM)
- Uncertain payback time for borrowers, probably will take a long time.

You can view it here:
#RUNE