Altcoin project Ichi (ICHI) has dropped nearly 90% in the last 24 hours after a series of intragroup liquidations on profit-making platform Rari.
Massive liquidation nearly zeroed altcoin price
The gradual liquidation of a pool caused a sudden drop in the price of ICHI tokens. Rari Capital wrote in a tweet late Monday that “Ichi Fuse Pool (136) is currently in bad shape due to gradual liquidations. This is an unauthorized repository owned and operated by the Ichi Foundation:
The decrease was due to Rari’s Fuse protocol automatically selling assets in pool 136 to support the value of the pool. However, the low liquidity of tokens on decentralized exchanges (DEXs) means that prices suddenly drop and funds are exhausted. At the time of writing, liquidity is at 0 USD as the entire pool was wiped out due to the cryptocurrency price drop yesterday. As we stated as Kriptokoin.com, the pool number 136 in Rari contains the assets issued by Ichi. The data shows that around $124 million from WBTC, oneBTC, ICHI and six other assets is locked in the Fuse protocol.
Ichi placed a collateral factor of 85% on ICHI and allowed hundreds of millions of dollars to be used as collateral. The collateral factor expresses the maximum amount that can be borrowed against the supplied asset. This means users must provide 100 ICHI as collateral to be able to borrow up to 85 ICHI for other assets at any given time. Aswath Balakrishnan, vice president of research at Delphi Digital, said in a Telegram post:
Liquidity was so structured that it was just below market price. This allowed the team to absorb the sale with great effect. There was not enough liquidity to cover all the ICHI liquidations, causing the price to plummet.
Rari developers said that high collateralization and lack of supply cap contributed to this slide. believes. “A collateral factor of 85% is extremely high,” said Rari developer Jack Longarzo in a tweet.
The altcoin was trading above $120 but the price dropped to $9.73 as the pool liquidation started around 7:30pm yesterday and continued till 9:30am this morning. Its market cap fell significantly from yesterday’s $579 million to $45 million at press time.
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