Iron Finance team says the project experienced the “world’s first large-scale crypto bank run.”
A victim, Mark Cuban has called for stablecoin regulation.
Iron Finance has released a blog post discussing its post-mortem actions after the protocol got involved in a “historical bank run” on 16th June. Iron’s native token TITAN fell by 100 percent from its record high of $64.04 in a space of 48 hours.
As a result of the bank run, crypto Billionaire Mark Cuban might have lost part of his investment. In reaction, Cuban has called for stablecoin regulation on the Iron Finance protocol. The investor held himself responsible for his loss, saying he was lazy and did not perform adequate research. He noted that venturing into DeFi requires mathematics in determining the key metrics, which he failed to do. Also, Cuban replied to a Twitter user that he “got hit like everyone else” on Iron Finance. He added:
There should be regulation to define what a stablecoin is and what collateralization is acceptable. Should we require $1 in U.S. currency for every dollar, or define acceptable collateralization options, like U.S. treasuries.
He said a token must possess some features before being referred to as a stablecoin.
Kraken CEO Jesse Powell has lambasted Cuban after the billionaire lamented his loss. In a tweet, Powell noted that Cuban’s lack of research is his “problem” and “it’s called gambling.”
Not doing your own research and YOLOing in to a terrible investment because your time was worth more than your money is your problem. It’s called gambling. Regulators are still trying to understand bitcoin 10+ years on. If you need the nanny state to hold your hand, you’re NGMI. https://t.co/Rs34CHwDFO
— Jesse Powell (@jespow) June 17, 2021
Iron Finance highlights post mortem actions
Following the bank run, Iron Finance has released a blog post to address the “world’s first large-scale crypto bank run.” Titled “Iron Finance Post-Mortem 17 June 2021,” the protocol mentioned the steps it would be taking to investigate the matter.
We must conduct an in-depth analysis of the protocol, for which we hire a 3rd party, in order to understand all circumstances which led to such an outcome.
On the day of the historical bank run, Iron Finance said some whales started moving liquidity from IRON/USDC at about 10 am UTC. After then, they sold TITAN, after which they sold IRON to USDC to liquidity pools. This action affected IRON’s value. Within two hours, TITAN declined from $65 to $30.
Hours later, some whales started selling again, which triggered worries among users who panicked and started redeeming IRON while they sold TITAN. The price of TITAN plunged to nearly zero. Iron Finance said the event is the worst that could befall the protocol.
The blog post explained:
Remember that Iron.finance is a partially collateralized stablecoin, which is similar to the fractional reserve banking of the modern world. When people panic and run over to the bank to withdraw their money in a short period, the bank may and will collapse.
The multi-chain partial-collateralized stablecoin regretted that the incident occurred. The team added that its IronBank (lending) and IronSwap are fully developed and will soon be live for testing. The protocol also promised that Iron stablecoin v2 would be available in a short time.
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