IRON Finance project token depreciated almost to zero

IRON Finance’s DeFi protocol team recommended that users should withdraw funds from the pools after IRON Titanium Token (TITAN) depreciated.

The depreciation of the token was due to the so-called “banking panic”, when the liquidity providers quickly and simultaneously tried to withdraw more funds from the platform than it has. This behaviour is partly leading to the spread of panic and distrust in the system.

From June 16 to June 17, large holders began selling assets and flooded the market with surplus tokens. During this time, the protocol minted TITAN and drew liquidity in an attempt to stabilize IRON. An opportunity for arbitration has appeared. This, in turn, brought even more tokens to the market and led to a crash.

As explained in IRON Finance, users will be able to redeem tokens in USDC, however, this requires waiting 12 hours before the blocking period expires. The company also promised to disclose the reason for the incident a little later.

The stability of IRON is ensured by the availability of sufficient collateral in smart contracts with a temporary lock. The collateral consists of two assets: in the Polygon network it is USD Coin (USDC) and TITAN, and in BSC it is Binance USD (BUSD) and STEEL.

The IRON emission mechanism assumes that in order to issue a stablecoin, the user needs to block 25% of the collateral in TITAN and 75% in USDC in the smart contract. Thus, when new IRONs are minted, the demand for TITAN increases with its price. When the price of TITAN falls sharply, IRON becomes unstable.

According to CoinGecko, overnight TITAN quotes fell from $ 64.19 to almost $ 0. The price of the stablecoin IRON fell 31% to $ 0.689. And the STEEL token has fallen in price by 62% – to $ 0.665.

According to Reddit users, TITAN’s rate collapsed due to a DoS attack on the Polygon network. They noticed that at night almost every block generated in the blockchain was almost 100% full.

As a result, billionaire Mark Cuban, who was the liquidity provider on the QuickSwap decentralized exchange, has suffered among many others.

The billionaire wrote that he was hit like everyone else. He assumed that the protocol had sufficiently increased the amount of funds blocked in his favour. When asked about what happened, Cuban replied, “Live and learn.”

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