Cryptocurrency: Iron Titans Rekd and Sink Like Stones

[grarpamp]

>From TITAN To Titanic: Did DeFi Just Suffer Its First 'Bank Run'?

https://www.rekt.news/iron-finance-rekt/
https://decrypt.co/73810/mark-cuban-hit-apparent-defi-rug-pull

Less than a week ago, billionaire investor Mark Cuban proclaimed:

    "Crypto Businesses make more sense than you think and valuing
tokens is easier and makes more sense than you think."

He may well be correct, but just a few days later, his investment in
TITAN - part of a "multi-chain partial-collateralized algorithmic
stablecoin ecosystem" from IRON Finance - has hit an iceberg and sunk
like the Titanic.

    I got hit like everyone else. Crazy part is I got out, thought
they were increasing their TVL enough. Than Bam.
    — Mark Cuban (@mcuban) June 16, 2021

As the price of TITAN plunged to zero, Decrypt reports that IRON
Finance called for all holders to withdraw liquidity from the pools
after being hit by what it called a "bank run."

>From over $60 to $0 in hours...

Source

While this collapse is getting a lot of attention due to Mark Cuban's
involvement, it is not the first of this breed of so-called
algorithmic stablecoins to hit the wall.

    I couldn't even begin to predict what will happen to the next algo
stablecoin, I just appreciate them as they come
pic.twitter.com/OXUHQOVoEo
    — Elmo's Pool 2 Fund (@0xElm0) June 17, 2021

So what triggered the collapse?

Rekt.com reports that the incident started when TITAN became
overpriced, perhaps due to users purchasing the token in order to farm
TITAN pairs at ~50,000% APY. Some large TITAN sales were made and the
price became volatile, making investors nervous, and leading them to
also sell their tokens.

    The IRON stablecoin then lost it's peg due to TITAN dropping so rapidly.

    This created a situation in which users could now redeem a token
worth 90 cents, for 75 cents of stablecoin and 25 cents of TITAN. An
incredible arbitrage opportunity which required minting new TITAN
tokens each time.

    The market was flooded with freshly minted TITAN, and a panic sale
began, pushing down the TITAN price and therefore making the IRON
stablecoin lose its peg even further.

    This vicious cycle could not be stopped until the $1 peg was regained.

    Despite briefly regaining the peg, the huge amounts of freshly
minted TITAN flooding onto the market caused the price of TITAN to
drop again, the peg to be lost, and the arbitrage opportunity to open
back up.

    As long as IRON is not at peg, TITAN will continue to drop, and as
long as TITAN continues to drop, IRON will not be at peg... and
everyone ran for the door.

Cuban told Decrypt via email: "Live and learn."