DeFi Protocol Iron financing suffered a massive impact on their TITAN token in what they described as a “bank run” and what many in the Cryptoverse called a carpet pull – but inadvertently providing an important warning for algorithmic stablecoins, with The Dallas Mavericks owner Mark Cuban is also among the victims.
IRON Titanium Token (TITAN) suffered an almost 100% loss in a single day, dropping from its all-time high of $ 64.19 on June 16 to nearly $ 0 on June 17. “Almost” means the price has reached 0.000000049491 USD.
“Dear community, please withdraw cash from all pools”, mentionned Iron Finance earlier today, promising to share a post-mortem “as soon as we have a better understanding of this bank run”. According to this initial post, the USD Coin (USDC) collateral was available for redemption.
According to the comments that followed, the request was not for TITAN, but for IRON, “a multi-chain partial stablecoin” available on Polygon (MATIC) and Binance Smart Chain (BSC), through the website. This guarantee consists of two tokens: TITAN and USDC based on polygons, as well as STEEL and binance USD (BUSD) on BSC.
At the second station, the team Explain that the price of TITAN having fallen to 0, the contract does not allow redemptions. Twelve hours of timelock will have to elapse before USDC redemptions are activated again.
At 0750 UTC, IRON is trading at 0.68 USD, after falling 32% in the last day. STEEL is also down 69% in one day, now changing hands at $ 0.56.
Cryptonews.com contacted Iron Finance for comment.
All of this suggests that algorithmic stablecoins – those that “aim to maintain a stable price by automatically adjusting the supply of stablecoin to meet demand,” such as Gyroscope protocolby Ariah Klages-Mundt wrote – come with their own risks.
Regarding Iron Finance, Klages-Mundt, who is a doctoral student in applied mathematics at Cornell University, argued that “the bank panic is self-reinforcing with the collapse of the price of the Titan token which implicitly supports the algorithmic part”.
Iron, an under-guaranteed stablecoin by design, is experiencing a banking crisis on its algorithmic / Titan part, if … https://t.co/ojKrb3bPyf
Through Anderson kill Partner Preston Byrne, this incident “has to do with the fact that all algo stablecoins are, economically speaking, total bullshit. […] Algo Stable Coins have been tried for years and years and they still explode. “
And what does Mark Cuban have to do with it, you ask?
“I was touched like everyone else”, Cuban confirmed. “The crazy part is I walked out I thought they were upping their TVL [total value locked] sufficient. [Then] Bam. “
Earlier this week he mentionned that “crypto companies make more sense than you think and token pricing is easier and smarter than you think.”
In a related blog post, Cuban also revealed that he has “put money” into some blockchain and decentralized finance (DeFi) projects, including Polygon.
He then explained that he was “a small” liquidity provider for the decentralized exchange. Quick exchange, providing two different tokens: DAI and, you guessed it, TITAN.
“But the cool thing is that while I don’t get any additional rewards for this pair (are you reading this Titan and Quickswap ???), I’m currently the only one [liquidity provider] in this pool so i get 100pct of fees. In each pool, LPs receive a percentage of the fee based on the percentage of liquidity they provide, ”he wrote.
“Valuing chips is easier and more logical than you might think” – Mark Cuban, two days before suffering a loss of 99.9%. https://t.co/O1Lf31arnj
Mark, I’m telling you the way you roll up your sleeves, no nonsense and get in the weeds is the way to go with anything in life.
Doing this in DeFi causes you to fight scars, exponential knowledge, and respect for the community.
These are stories we’ll soon be laughing at
– Spadaboom (@ spadaboom1) June 16, 2021
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