Kujira Foundation’s failure in risk management leads to a 55% plunge in KUJI token prices as leveraged bets backfire, prompting plans for a DAO to manage the treasury and protocols.
Points
- Kujira Foundation experiences significant losses due to leveraged liquidity positions.
- KUJI token prices plummet by 55% within 24 hours.
- Foundation plans to establish a DAO to manage the treasury and protocols.
- The aim is to reduce debt and enhance transparency.
The Kujira Foundation, known for developing the Cosmos-based Kujira blockchain, recently faced a severe financial setback as its leveraged bets went awry, leading to a dramatic 55% drop in the value of its KUJI token within a single day. The foundation’s operational wallet, which held leveraged positions intended to boost the network’s applications, saw substantial liquidations, turning millions of dollars into bad debt amid market volatility.
The liquidation cascade was triggered when loans from publicly allocated KUJI tokens became undercollateralized, leading to automatic sell-offs and further price declines. This scenario highlights the foundation’s lack of effective risk management and the significant impact of market volatility on leveraged positions.
In response to this crisis, the Kujira Foundation announced plans to create a decentralized autonomous organization （DAO） to take control of its treasury and core protocols. The DAO aims to reduce debt and enhance transparency, with an initial mandate to manage 14 million KUJI tokens, valued at $5.5 million at current prices.
A team member explained in a Telegram broadcast that the leverage positions were meant to bootstrap liquidity and activity within the ecosystem. However, targeted attacks on these positions exacerbated the situation, making it a constant struggle since their inception.
“As a team, we thought the best use of a portion of ops funds would be to leverage and deploy across the ecosystem to bootstrap liquidity and activity,” wrote @team_kujira. “We genuinely felt like this was the correct course of action.”
At its peak in March 2024, Kujira had over $124 million in locked funds, which have now dwindled to $35 million following the liquidations. The foundation’s plan to establish a DAO is seen as a strategic move to regain stability and community trust by increasing operational transparency and reducing financial risks.
解説
- The Kujira Foundation’s experience underscores the risks associated with leveraged positions, particularly in volatile markets.
- The establishment of a DAO aims to provide a more decentralized and transparent approach to managing the foundation’s assets and protocols.
- This move reflects a growing trend in the crypto industry towards using DAOs for governance and operational management to enhance accountability and community involvement.