a chart of TITAN, one of the platform's two house tokens

the downfall of TITAN

By saatb | saatb's crypto blog | 17 Jun 2021

by the way, this is copied from a reddit post that i wrote.

so, everyone is talking about the “rug pull” that Mark Cuban suffered, in the form of a DeFi house token going from $65 to $0.0001 in a couple hours. i figured i would provide some insight and share what happened from my point of view, if anyone cares.

i first learned about Iron.finance last week, and it seemed like a pretty cool project. the platform consists of two tokens, IRON and TITAN. IRON aims (or rather, aimed) to be a stablecoin backed by both TITAN and USDC, and it did a pretty good job of that. TITAN was the house token, and was used to mint new IRON tokens.

the platform also had two features, minting and redeeming. when you minted, you kind of traded in TITAN and USDC in exchange for IRON tokens. this caused the total supply of TITAN to go down, which was probably the driving force for its price. redeeming referred to exchanging your IRON back into USDC and TITAN.

naturally, what i was mainly interested in was how much interest i could earn on my LP tokens. i was in absolute shock when i saw that i could make 5% daily on a TITAN-MATIC pair, and 2% daily on IRON-USDC, which is a stablecoin pair!! i suppose this should have been when the first warning bells popped up in my brain, but i guess i just ignored them.

fast forward 6 days, and TITAN is hitting $65. i’m making incredible gains, and the APY is still holding strong. i sell a bit, but hold on to most as i thought the price would spiral towards infinity. the $15 that i deposited into TITAN-MATIC is now worth $55, and it’s compounding more and more every minute.

early morning/late at night was when the first sign of this crash came. TITAN started plummeting, and IRON started to lose its peg. the Polygon network became insanely congested as people tried selling and buying. i was asleep during this, and by the time i woke up, TITAN was at about $25. i thought to myself “this is a fairly normal correction, there’s no need to worry!” i didn’t buy more though, just held on to what i had.

i went on about my day, occasionally checking in on a discord group with me and a few of my degen friends. the network was insanely congested, and platforms like AAVE, QuickSwap and Sushi weren’t loading due to the increased load. people were rushing to sell their TITAN, causing the price to drop even further.

when i checked in again, TITAN was worth about $3. at this point, things were looking grim, and i should have pulled out. but i couldn’t, due to the congestion on the network. i decided to just leave it in, as there wasn’t much i could do at this point. TITANs supply started going up like crazy which lead to an even lower drop in prices. everyone was panicking, and it hit me that this was the downfall of Iron.finance.

on top of it all, since the Iron website used an average of the past hours to determine their prices instead of instantly reflecting the market price, there was an insane arbitrage opportunity which was scooped up by bots and whales alike.

when i finally had a chance to pull out my LPs, TITAN was valued at $0.00001 or something ridiculous like that. my initial investment was around $40, and from all of this, i only lost $5, which is 1/8 of my money.

all in all, i didn’t get hit too hard by this, and i’m fine with the way it ended. it was going to happen eventually. i was more mad at myself than anything, for a variety of reasons. here are a couple things i learned about DeFi, and just in general.

  1. never be afraid to take profits. i barely took any profits during the entire thing, and i’m sure that if i had, i would have made a ton of money.

  2. if it’s too good to be true, it most likely is. i’m not sure why i ever thought that 5% daily would ever be sustainable, but i went in anyways.

  3. impermanent loss is a real bitch.

there was a variety of reasons behind the downfall of TITAN, and while it seemed like a tragedy at first, it’s a great learning opportunity and a reminder of how risky DeFi can be.

another thing to note: the team said that this was caused by a bank run, but theres been speculation and rumors about an exploit that caused this entire thing.

that's all that i have for you today! if you have any questions or comments, be sure to leave them below. 

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saatb's crypto blog
saatb's crypto blog

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