Iron Finance Token slips from $ 64 to almost zero after the “large-scale Crypto Bank Run” – News Bitcoin News
The value of the Iron Titanium Token (TITAN) shook badly after the project suffered from what the team called the “world’s first major crypto banking run”. After the project hit a high of $ 64 per token on Wednesday, the project slid to near zero and remained worthless on Thursday afternoon.
Iron Finance Claims Project suffered from a “bank run”
The world of decentralized finance (defi) is exciting, but it also harbors major risks resulting from smart contract exploits, flash loans and alleged bank runs. This was the case with the Iron Finance project, as the team’s native token lost all of its value in a matter of hours. On Wednesday, the Iron Finance team explained what happened on Twitter and was followed with a post mortem on Thursday.
“Dear community, please withdraw liquidity from all pools. We will share an autopsy as soon as we understand this bank run better, ”said the official Twitter account on Wednesday. “USDC collateral is available for redemption as usual,” added the Twitter account.
Of course, Iron Finance’s protocol team was criticized immediately after the tweet and people weren’t happy with the situation. Iron Finance’s autopsy the next day explains how the project has suffered. “We never thought it would happen, but it just happened. We have just experienced the world’s first major crypto bank run, ”says the blog post.
“On June 16, 2021 at around 10am UTC, we noticed that some whales were starting to remove liquidity from IRON / USDC, then selling TITAN to IRON and then IRON to USDC directly to liquidity pools instead of redeeming IRON, which resulted in the IRON price has fallen. peg. TITAN fell from $ 65 to $ 30 in 2 hours, which later recovered to $ 52 in 1 hour and IRON fully recovered, ”adds the autopsy.
After the rebound, the Iron Finance team discovered a few hours later that “some large owners were starting to sell again”. Iron Finance project members said “a lot of users were panicking” and the whole situation created a “negative feedback loop”.
“At some points the price of TITAN got so low, close to 0 in fact, which resulted in the redemption contract reversing the redemption transactions. We’ve already queued the fix for it so people can redeem it at 5:00 PM UTC, ”the team noted. The Iron Titanium Project members added:
What we have just witnessed is the worst that can happen to the protocol, a historic bank run in the modern high-tech crypto space. Remember that Iron.finance is a partially collateralized stablecoin that is similar to the fractional reserve banking of the modern world. When people panic and run to the bank in a short amount of time to withdraw their money, the bank can and will collapse.
A number of Iron Finance investors are losing a lot
Comments about the Bank Run are littered across all Twitter and Reddit forums as it appears that many investors in the Iron Finance project have lost money, according to a variety of testimonies.
“My school fees [are] away “, a person tweeted On Wednesday. “I had $ 3,000 there and I have $ 0.50 left. What else can I withdraw ?? !!! That’s not fair! Whoever caused this should be punished … What should I do now? ”The person added.
“I lost all of my Matic from Pool Matic / TItan,” another person tweeted.
Others were not as sympathetic to those who lost money as a number of people repeated the age-old adage that you only invest what you can afford to lose. A specific tweet response to the Iron Finance token thread said:
First rule when investing (especially in defi): Don’t put anything in it that you can’t lose. You really have no one to blame but yourself.
As for the Iron Finance project team, maintainers say they “learned a lot from this incident and although nothing has been fixed in the current system, we will continue our journey with more products in the future.”
Currently, the team plans to do “an in-depth analysis of the log” to understand what happened when this unusual event occurred. The autopsy also includes a quote from an Iron Finance investor and Finder.com.au’s founder, Fred Schebesta.
“There were neither pack pulls nor exploits,” said Schebesta. “What happened is the worst that could happen given your tokenomics,” concludes the Iron Finance blog post.
What do you think of Iron Finance’s bank run? Let us know what you think on this matter in the comments below.
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