Review of the OM crash event: single-handedly bringing down the entire RWA zone

Author: BITWU.ETH Source: X, @BTW0205

After browsing for half a day, I finally understand the entire process before and after the crash. This crash is not just a single event, but a reflection of the structural contradiction between the "decentralized ideal" and the "centralized reality."

MANTRA is a DeFi platform based on Cosmos SDK, focusing on the tokenization of real-world assets (RWA), with its native token $OM achieving a 500x increase in one year.

1. Crash Timeline

• On March 20, community users monitored that a large OM holder address withdrew funds and transferred them to a trading platform, with rumors claiming that OM has completed several large discounted over-the-counter transactions.

• Subsequently, multiple large holders of OM began to dump, causing the price of the coin to continue to fall. Many OTC buyers were trapped, and a sense of panic spread in the community, leading to a rush to sell.

• In the early morning of April 14, the price of $OM plummeted from 6.2u to 0.4u, a drop of over 90%, with a market capitalization evaporating by 5.5 billion dollars in 2 hours.

• On-chain data shows that at least 17 addresses transferred a total of 43.6 million OM to exchanges before the OM crash, with 2 addresses linked to strategic investor Laser Digital. (Speculation on the sell-off)

• The MANTRA team denied the "runaway" claims, stating that the sharp decline was caused by "improper forced liquidations by other (CEX) during low liquidity periods (early morning in Asia)" and suspecting that there may be negligence or market manipulation by the exchange.

At the same time, it is emphasized that the tokens are still locked and have not involved any selling by the team or core investors.

On-chain data also shows that there were a large number of liquidation orders during the crash, leading to a chain sell-off, and insufficient market depth exacerbated the decline.

2. What issues are reflected in the OM incident?

1) There is actually a power struggle between the project party and CEX

A deep-seated contradiction is that a CEX is both a liquidity provider and a potential conflict of interest. For example, an exchange may earn fee revenue through liquidation without being accountable to the project ecosystem.

MANTRA has repeatedly hinted that the project party lacks actual constraints on CEX, accusing CEX of abusing its discretion.

CEX allows liquidation during inactive periods, essentially shifting the risk to retail investors.

It's like suddenly closing all emergency lanes on the highway at 3 AM; any car breaking down would trigger a pile-up involving hundreds of vehicles.

2) The "Valuation Trap" of High FDV and Low Circulation Projects

The FDV/TVL ratio of OM has reached 730 times, far exceeding the industry's healthy level (usually below 50 times).

This extremely unhealthy indicator suggests that the market value of OM far exceeds its actual value support, making it susceptible to short selling or liquidation. The previously questioned smart money may be positioning for bearishness + short selling + liquidation counterattacks, waiting for emotional triggers to ignite, which indeed aligns with on-chain data.

Create an illusion of scarcity through lock-up to attract speculative funds to drive up market value, ultimately leaving retail investors to take the fall.

3. What should we be vigilant about?

In the face of the plummet, project parties, CEX, and market makers all try to shirk responsibility, but all three are sharing the benefits of listing coins. There may be a possibility of collusion hidden within the profit chain. Is it possible for them to jointly control the market and strangle retail investors?

Decentralization of responsibility itself is the best breeding ground for market manipulation.

CEX effectively controls the pricing of tokens by managing liquidity and clearing rules. Liquidity is power. Shouldn't we improve the risk control mechanisms (for example, dynamically adjusting the clearing threshold) to minimize regulatory vacuums?

In this case, retail investors have a natural information disadvantage. Project teams should also consider how to avoid over-reliance on centralized liquidity.

Projects with high valuations supported by "unlock expectations" and "ecological blueprints" collapse much faster than traditional financial assets when faced with black swan events.

The narrative bubble will eventually burst, and it boils down to just two points from oneself —

1. Stay vigilant about the "FDV myth" and return to fundamental analysis. True value should be based on protocol revenue and user growth, rather than paper valuations.

2. Do not hold high-leverage positions during low liquidity periods; it will take a bit longer to die.