Iron.Finance and Mark Cuban take stock of the TITAN debacle

The Titanium Token (TITAN) of the DeFi protocol Iron Finance fell from over 60 USD to 0 USD within a very short time. Users are now required to withdraw their deposits from the liquidity pools. The project is currently seeking clarification. Star investor Mark Cuban has also commented on the “bank run” – and is calling for stricter regulations.

Another horrific news makes clear the dangers that await careless investors in the Wild West of decentralized finance (DeFi). This time it hit the DeFi project Iron Finance. With IRON, Iron Finance offers a stablecoin for the Binance Smart Chain (BSC) and Polygon. In contrast to centralized stablecoins such as USDC, however, IRON is not backed 1: 1 by fiat money. Instead, IRON relies on a dual token system, consisting of the stablecoin USDC and a volatile token, which is called STEEL on BSC and Titanium (TITAN) in Polygon. USDC, which stores the log as collateral, will be invested up to 75 percent in various DeFi liquidity pools, while the remaining 25 percent will be kept from the log to service the redemption of IRON tokens into USDC.

For reasons that have not yet been clarified, the TITAN exchange rate collapsed on the night of June 17th. TITAN fell from 65 USD to almost 0 USD (0.000008225 USD) in just a few hours, making it practically worthless. On Twitter, the Iron Finance team spoke of a “bank run” and announced that the incident would be dealt with. Many TITAN holders assume that the project is a “rug pull”, that is, the misappropriation of user assets by the project management. Iron Finance rejects such allegations on the project homepage.

Message on the homepage of Iron.Finance

After that there was neither a hack nor an inside job, it says there. Cheated Hodler: inside this should hardly be reassuring, after all, only two options remain open: Either the tokenomics from Iron.Finance are anything but mature, or a faulty smart contract was – despite the audit – responsible for the crash. It is at least noticeable that the protocol happily printed fresh tokens instead of the targeted maximum amount of one billion TITAN in circulation. According to Coingecko there are a stupid 27.8 trillion TITAN in circulation.

Mark Cuban also gambled away with TITAN

The prominent US investor Mark Cuban is also affected by the TITAN crash. On Sunday, Cuban raved about the “brilliance” of yield farming and liquidity mining, two central application examples of DeFi. On his Blog Cuban chatted from the closet: He is a small liquidity provider for the DAI / TITAN exchange pair at DEX QuickSwap.

Apparently, however, Cuban got away with a black eye.

I was hit like everyone else. The crazy thing is, I made it out, thought they were going to raise their TVL enough. Then Bam,

explains Cuban via Tweet.

The clarification of the incident by Iron.Finance is still a long time coming at the time of going to press.

UPDATE – 6/18/2021 11:04 am

The team now has the promised “post-mortem” released. After that, whales in the ecosystem would have made massive sales that caused panic among the other holders. The result: users sold their TITAN tokens en masse and redeemed IRON for USDC. Therefore, Iron.Finance speaks of a “bank run” in the preparation of the incident.

What we have just witnessed is the worst that could happen to the protocol, a historic bank run in the modern high-tech crypto space. Remember that Iron.finance is a partially secured stablecoin that is similar to reserve banking in the modern world. When people panic and run to the bank to withdraw their money in a short period of time, the bank can and will collapse,

explains the Iron.Finance team.

Mark Cuban also spoke again about the Iron.Finance cause. Across from the US news portal Bloomberg the star investor admits to have been “too lazy” to penetrate the mathematics of the algorithmically backed stablecoin IRON. Cuban suggested that there should be regulatory guidelines for stablecoins.

If the collateralization is not 1 to 1, should the math of the risks be clearly defined for all users and approved before releasing? Presumably, since stablecoins will most likely need to reach hundreds of millions or more in value to be useful should they need to register,

conjectures across from the Shark Tank Star Bloomberg.