Euch means plural you in the informal, right? So "I thank you guys" should be acceptable, I think.
English having no plural/singular distinction for "you", English speakers often find it handy to think of "ihr" (or vosotros/Ustedes in Spanish; I can't think of the French at the moment) as equivalent to "you guys" or "you all" or even "y'all" (a usually Southern U.S. contraction of "you all") to denote its plurality.
(once upon a time, in Early Modern English, English used "ye" (which is "you" in the accusative case) or "you" for both plural and formal second person pronouns, and "thou" (acc. "thee") for informal singular second person, but as this isn't an unambiguous distinction and these words are now archaic and somewhat apt to confuse many speakers through unfamiliarity with their usage, it's not really helpful)
Just a small note - 'Ye' is probably just another form of 'Thee'. Old English used to have a letter 'th' called Thorn. During the transition to middle English is became used less, but when printers in England started using movable type brought in from continental Europe which lacked a letter Thorn, they substituted in the Y.
So where you see people trying to market somewhere as 'Ye olde shoppe' or whatever, the 'Ye' in this case is just 'the'. Similarly, 'thee' was sometimes printed as 'ye'.
No, it is no more a form of thee than "we" is a form of "I" or "ihr" a form of "du" (and the latter are related to ye and thou respectively).
"Ye" as a spelling of the English definite article "the" does originate from the thorn confusion, but the pronoun ye (and I mixed up the cases when I said that two years ago; "ye" is actually the plural nominative!) derives from an Old English pronoun "ge". It seems the formality attached to the plural came from French influence related to the royal "we".
(incidentally, according to the Online Etymology Dictionary, ge got its vowel and "ihr" its r from similar modifications based on the first person plural pronoun in the respective languages.)
This is the formal version of "thanks"? and the informal is "ich danke dir"? Is that correct?
It doesn't make sense that Duo accepts "Thank y'all of you" (which no one would ever say, (and I live in Texas) and does not accept "I thank all of you"
Sort of. The most direct translation is just "euch" = "you." Adding "all/allen" just emphasizes that you're talking to a whole group and isn't mandatory in either language. The emphasis is a little different, since "euch" is already clearly plural and "you" isn't, but, to preserve the emphasis, your best translation is still "you all / all of you" = "euch allen."
"Euch" is the accusative and dative form of "ihr." ("Ihr" and "euch" are both plural.) It's the same as the difference between "we" and "us" in English-- you use "ihr" for subjects and "euch" for direct objects (accusative) and indirect objects and some other special dative situations. "Danken" is one of those special situations since it takes a dative object.
So you would say "Ihr dankt mir" for "You (all) thank me" (since "you" is the subject, use nominative "ihr") but "Ich danke euch" (since "you" is the object and "danken" takes dative, use dative "euch").