Shark Tank celebrity billionaire Mark Cuban “got out” at some point, meanwhile, TITAN tokens fell from US$65 to zero.
A crypto token known as TITAN both boomed and bust in the same 24 hours, with its value ultimately flat-lining to zero in what has been described as a “vortex of money”.
Mark Cuban, the American celebrity billionaire, was reportedly ‘hit’ by the crypto’s collapse but said on Twitter that he “got out”. The extreme volatility event came only days after Cuban revealed in a blog post that he was a liquidity provider to the system.
‘Tokenomics’ was blamed for the imploding of TITAN which ironically was supposed to be tied to another crypto token, called IRON, which was designed to be what crypto-heads call a ‘stablecoin’.
To keep it simple, a stablecoin is intended to be a non-volatile crypto asset. They typically do this by through an external attachment, or ‘peg’, to some other representation of value (like a Dollar or perhaps a unit of gold).
IRON was 75% pegged to USDC – a US dollar pegged stablecoin created by crypto-exchange Coinbase – but the other 25% was pegged to TITAN, which was to be used as units of collateral.
Evidently, the catch was that as more IRON coins were ‘minted’ due to rising popularity the price of TITAN was driven up.
The price of TITAN peaked at US$65 per coin as recently as Wednesday.
Unfortunately for anyone left holding TITAN coins the flywheel that sent it soaring also worked in reverse.
Selling by speculators that had cashed in on the rise in TITAN’s price caused the ‘peg’ to become unstable, with panic selling sending a flood of tokens into the open market to further exacerbate the collapsing value.
It got messier still, according to a Coindesk report, which explained that an arbitrage trade exploiting the difference between the relative prices of IRON and TITAN resulted in yet more TITAN coins being sold.
On social media, some internet users speculated that the TITAN collapse was a ‘rug pull’ which is a type of scam where crypto systems are shut-down, in a similar fashion to a more traditional ‘pump and dump’ share trading scheme.
Fred Schebesta, an IRON investor quoted by Coindesk, called it a “crypto vortex of money.”
“There was no rug pull or exploits. What happened is just the worst thing that could possibly happen considering their tokenomics,” Schebesta.
The IRON stablecoin was attached to the Polygon blockchains platform. At one point some US$2bn of value was ‘locked’ in smart-contracts (a type of contract on a blockchain) tied to IRON and TITAN.
Mark Cuban, famously one the investors in the Shark Tank television show, owns the Dallas Mavericks NBA team and has been a bullish proponent of cryptocurrency, decentralised finance and blockchain technology.
As recently as Tuesday, in his own blog, he wrote that “banks should be scared” as decentralised finance (or DeFi) systems grow to challenge traditional finance operations and institutions.
Cuban has previously been particularly vocal about a DeFi platform called Aave.
“Everything is controlled by smart contracts. It’s fully automated. You don’t have to get approval from anyone and it takes minutes to take out a loan,” Cuban said about earlier this year.
Aave is described as a “decentralised non-custodial liquidity market protocol” which, in practical terms, means it allows users to either lend or borrow funds via a decentralised ‘pool’ of crypto tokens.
In this case, Aave uses Ethereum, enabling users to deposit tokens in return for a passive income of tokens in the same way a lender would receive interest whilst borrowers to receive either with or without collateral.