The price of Kujira’s native token plummeted by 40% due to the liquidation of the foundation’s on-chain leveraged positions, resulting in a significant market impact.
Points
- Kujira token dropped 40% after foundation’s leveraged positions were liquidated.
- The liquidations triggered a cascading sell-off.
- Kujira Foundation’s attempts to stimulate liquidity and activity backfired.
The native token of Cosmos-based Kujira blockchain saw its price decline 40% today, dropping from $0.97 to $0.57, due to the Kujira Foundation operations wallet liquidations. The foundation had taken leveraged liquidity provision positions worth millions of dollars, which it failed to manage properly on its own DeFi platform.
Using operational funds in leveraged positions aimed to improve liquidity and stimulate activity on its decentralized exchange （DEX）, the team claimed in a statement. However, the liquidations occurred as the loans taken by the team using its own Kujira （KUJI） token reserves became undercollateralized amid volatile conditions. This resulted in automated liquidations, triggering a cascading sell-off and dropping the prices of the collateralized asset. Data from Pulsar Finance shows that the team’s wallet still has a debt position of $2 million.
Statement from the Team
“As a team, we thought the best use of a portion of the ops funds would be to leverage and deploy across the ecosystem to bootstrap liquidity and activity,” the team said in a Telegram post. They further claimed that certain people targeted their positions. “Sadly, this coincided with various attacks. People targeted the team’s positions, and it has been a constant fight since these positions were created.”
The team added that they take responsibility for their positions and apologized for the impact on the price. “Although temporary, we realize that it hurts and we are sorry.”
Overview of Kujira
Kujira is a blockchain in the Cosmos ecosystem that operates as a decentralized finance hub. Some key features of Kujira include a decentralized exchange, a lending platform, and a decentralized stablecoin called USK. The network also runs a system for liquidating undercollateralized positions by the users themselves. The blockchain has a total value locked of over $42 million.
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解説
- The liquidation of leveraged positions highlights the risks associated with using operational funds in high-risk activities.
- Kujira’s decentralized finance hub offers various features, but the recent events show the importance of careful risk management.
- The market impact of such liquidations can be significant, leading to sharp price declines and loss of investor confidence.