The founders of the DeFi project IRON Finance urged users to urgently withdraw funds from the pool after the TITAN tokens depreciated. The main reason for such a sad situation was called “banking panic”.
Today has been a real disaster for IRON (TITAN) token holders, as their losses amounted to almost 100% in less than 24 hours. The price of the coin fell from an all-time high of $65 to $0.000000049.
The DeFi protocol team tried to quickly respond to the incident, but the flight of investors from the sinking ship turned out to be faster. They called for the withdrawal of liquidity from the pools, promising to tell in detail about what happened as soon as they understand what exactly triggered the collapse.
The IRON Finance project operates on the BSC and Polygon blockchain. At the same time, they have their own stablecoin pegged to the dollar, backed by a temporarily blocked margin in smart contracts. Thus, to issue IRON, the user must block 25% of the amount in the smart contract and 75% in the USDC equivalent. That is, when “fresh” IRONs are minted, the demand for TITAN increases in parallel with it. If there is a sharp drop in the price of TITAN, then IRON “flies” with it. This happened last night when the value of TITAN plummeted to almost zero. Stablecoin plunged in price by more than 32% to the level of $0.68, while STEEL token lost more than 60% in price, stopping at $0.66.
According to team representatives, at the moment when the price reached $65, the whales began to sell their tokens, flooding the crypto market with surplus assets. While the protocol was "creating" TITAN, withdrawing liquidity, and trying to settle the situation with IRON, the possibility of arbitrage arose, which "threw" an even larger volume of coins into the market. IRON Finance offered everyone to redeem their tokens in USDC equivalent, waiting for the end of the temporary blocking for 12 hours. The crypto community, in turn, suggested a possible DoS attack on the Polygon blockchain, noting that new blocks in the network were instantly filled up to 100%. The value of the transactions in these blocks was not just zero but sometimes flagged as being sent by the user to himself.
The main victim in the current situation on the Internet was named billionaire Mark Cuban. As a liquidity provider for DEX QuickSwap, the businessman said he was also a victim of the incident. Although in his Twitter he clarified that he managed to "get " before the collapse occurred, having noticed the rapidly increasing TVL.
The community is still wondering if everything that happened is related to a critical vulnerability of smart contracts or an exploit that increased number of tokens to an insane figure of 922 billion and made them useless. Others, like most depreciated BSC-based DeFi projects, are looking for traces of a possible rug pull scheme.