Key Takeaways
- Iron Finance’s TITAN, which backs the algorithmic stablecoin IRON, collapsed after a massive selloff last night.
- The price crash likely occurred because of IRON’s pegging mechanism depending on arbitrage.
- The team has denied allegations of a rug pull, and will let IRON holders redeem the stablecoin for USDC.
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Iron Finance’s governance token completely collapsed last night. According to the team, the project’s TITAN token suffered from a bank run after users were urged to remove liquidity from all pools.
Iron Finance Under Fire
Iron Finance, a DeFi project that issues a partially collateralized algorithmic stablecoin called IRON, has suffered a major incident.
TITAN, the governance token that backed IRON, collapsed last night due to a massive selloff. The token price crashed from around $60 to $0.00000006, as per data from CoinGecko. Meanwhile, the IRON stablecoin is trading at around $0.70 (stablecoins like IRON are meant to stay pegged to an asset—in this case, that’s the dollar).
The stablecoin was backed by USDC and TITAN in portions of 75% and 25%. Iron Finance launched on Polygon less than a month ago and quickly attracted over $2 billion in liquidity.
It is still not clear what was the reason behind a near-zero price collapse. Many have speculated that the crash could have been due to a “rug pull,” a situation where project founders make off with the users’ funds locked in smart contracts. However, the team denied these claims. On its website, it wrote:
“There is no hacks, no exploits or rug-pullings.”
To incentivize USDC staking in its liquidity pools, the project had offered yields up to 10,000% APY in TITAN tokens. The yield caught the attention of Shark Tank entrepreneur-turned-DeFi enthusiast Mark Cuban, who revealed that he was farming TITAN in a blog post earlier this week. Cuban tweeted that he “got hit like everyone else” last night.
The Likely Cause
TITAN may have crashed due to the…
