Iron Finance’s TITAN, the governance token that backed IRON, recently experienced a collapse that was triggered by a massive selloff. TITAN took a nosedive, going from roughly $60 to $0.000008836. As for IRON stablecoin, it is currently trading at roughly $0.99.
While they have yet to pinpoint the actual reason behind the collapse, many speculated that it might have been the result of a “rug pull” — a term meaning that the crypto developers abandon the project and flee with the users’ funds locked in smart contracts.
The Iron Finance team, however, denied the claims on their official website.
Please don’t buy TITAN or IRON. There is no hacks, no exploits or rug-pullings. We will post a post-morterm article with detailed explanation in the next hours.
Statement on the Iron Finance website
The project offered yields up to 10,000% APY in TITAN tokens as a way to incentivize USDC staking in its liquidity pools. The yield captured Billionaire Mark Cuban’s attention, who mentioned that he was farming TITAN on a blog post on June 13. Cuban revealed that the collapse has affected him as well on Twitter.
The Most Likely Cause
It is highly likely that the stablecoin pegging mechanism was what caused the crash. Once the price started going down, IRON lost its dollar peg. Normally for algorithmic stablecoins, the price would be restored once the pegging mechanisms had come into effect. However, the situation went out of hand.
Whenever IRON is valued below $1, anyone can purchase IRON and redeem it for $1 worth of value, split into $0.75 of USDC and $0.25 of TITAN.
Investors that found this exploitable blindspot bought and redeemed IRON at a cheaper price when the stablecoin was traded under a dollar. This led to the collapse as the TITAN tokens were continuously sold on the open market.
The post Iron Finance Discredits Rug Pull Claims After TITAN Price Crash appeared first on SuperCryptoNews.