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Mantra Token Crashes 90% in an Hour–Was It a Rug Pull or Reckless Liquidation?
In an incredibly dramatic twist of events, Mantra (OM), which is the token that is the primary currency of the RWA-focused cryptocurrency, plummeted more than 90% in just one hour on Sunday. This sent an earthquake through the crypto industry. Mantra’s price dropped from $6 down to $0.40 and erased millions of dollars in value prior to making a slight recovery.
What Happened?
As per Mantra founder and co-founder John Patrick Mullin, the incident wasn’t the result of internal misconduct, but rather the sudden liquidation of central exchanges. The actions were performed during a liquidity-challenging trading timeframe.
“The timing and depth of the crash suggest that a very sudden closure of account positions was initiated without sufficient warning or notice,” Mullin said on the X.
The man also claimed that the trades had been “closed without margin calls or notice,” pointing a finger at exchanges with the intention of the trigger of a cascade of liquidation. Mantra’s official channels also echoed the same sentiments, blaming the fall due to “reckless liquidations.”
A Steep Fall and Lingering Questions
CoinGecko reports that the cryptocurrency was briefly down to $0.37 but then rebounded to $0.80. It’s 90 percent lower than its record-breaking high of $8.99 that was recorded in February. This makes this one of the biggest one-day drops in crypto this year.
The crash’s timing–during times of low volume trading–could be a factor in the repercussions of liquidations. This created an ideal storm that could trigger a price collapse.
Rug Pull? The Team Says No.
Rumours of a possible rug pull, or even an insider dump, started to circulate shortly after the incident. But the Mantra team immediately responded by disproving any involvement. They also assured that the token allocation is secure and verified on-chain.
Forced Liquidations Explained
Forced liquidations happen in the event that traders who have leveraged positions do not meet the standards for margin. In this case, exchanges instantly sell items to compensate for the loss. In low liquidity times, it could trigger an uncontrollable, rapid price decrease.
What’s at Stake for Mantra?
It couldn’t have happened in a better time. Mantra is positioning itself as an important actor within the RWA (real-world asset) tokenization market, a fast-growing sector that is expected to help bring real-world assets such as commodities and real estate onto the blockchain. Mantra has even announced alliances with some of the biggest players, including Google Cloud and Dubai’s DAMAC Group.
Now, however, this dream is in danger.
“The nature of these occurrences puts investor confidence to the test and unveils a pivotal question about the method used to secure tokenized assets that can be more acceptable to the mainstream,” said Hank Huang, CEO of Kronos Research, in a conversation with Decrypt.
Huang noted that the sector has only started to emerge, and for this reason, he stressed the importance of establishing a dependable, flexible infrastructure.
Burning Tokens and Damage Control
In a new surprise to the story, the data obtained from Arkham Intelligence revealed that Mantra DAO has burned about 21,1 million OM tokens in a variety of transactions on the 2nd of April. Although this was not directly linked with the crash itself, it can bring up questions regarding the overall strategy and the timing.
In the meantime, analysts of Tiger Research have withheld public remarks, in anticipation of further information to be revealed at a press conference to be held later in the day in Asia.
Where Does Mantra Go From Here?
The Mantra Team, the path ahead is long and arduous. The world of trust, particularly in crypto, can take a long time to develop and a few seconds to destroy.
“When discretionary powers are exercised without due internal and external oversight, dislocations like what recently happened can and will occur, hurting both projects and investors alike,” Mullin stated.
If anything, the incident serves as an opportunity to wake up. When tokenized assets in the real world gain popularity, developers as well as investors must deal with the issues of liquidity, transparency as well and central oversight.
