After the TITAN tokens devalued, the founders of the DeFi initiative, IRON Finance, urged customers to withdraw funds from the pool as soon as possible. The fundamental cause of such a terrible circumstance was a phenomenon known as “banking panic.”
Today has been a complete disaster for IRON (TITAN) token holders, who have lost over 100% of their investment in less than 24 hours. The coin’s value has dropped from a high of $65 to $0.000000049.
The DeFi protocol team attempted to respond promptly to the situation, but investors fleeing the sinking ship proved faster. They demanded that liquidity be removed from the pools, promising to describe what had transpired as soon as they figured out what had caused the collapse.
The IRON Finance project uses the BSC and Polygon blockchains. They also have their stable coin pegged to the dollar and backed by a momentarily blocked margin via smart contracts. To get IRON, the user must first block 25% of the total amount in the smart contract and 75% in the USDC equivalent. That is, as new “fresh” IRONs are issued, demand for TITAN rises in lockstep. Suppose the price of TITAN falls sharply; IRON “flies” along with it. This occurred yesterday night when the value of TITAN dropped to nearly nothing. The price of Stablecoin has dropped by more than 32% to $0.68, while the price of STEEL token has dropped by more than 60% to $0.66.
According to team representatives, whales began selling their tokens as the price reached $65, flooding the crypto market with surplus assets. The risk of arbitrage arose when the protocol was “creating” TITAN, draining liquidity, and attempting to settle the matter using IRON. This “threw” an even larger volume of coins into the market. IRON Finance offered everyone the opportunity to redeem their tokens in USDC equivalents as they waited for the 12-hour temporary blockade to lift. The crypto community responded by speculating on a probable DoS attack on the Polygon blockchain, noticing that new blocks were promptly filled to 100%.
The transactions in these blocks were not only worthless, but they were also occasionally marked as being sent by the user to himself.
Mark Cuban, a millionaire, was the biggest victim of the current Internet predicament. The merchant said he was also a victim of the affair as a liquidity supplier for DEX QuickSwap. However, he stated on Twitter that he could “get” before the collapse after noticing the quickly increasing TVL.
The community is still unsure if everything that happened was caused by a severe smart contract flaw or an exploit that inflated the number of tokens to an absurd 922 billion and rendered them unusable. Others, such as most decommissioned BSC-based DeFi initiatives, are looking for evidence of a potential rug pull plan.