The Tellor team’s $2.4 million TRB investment was identified by an on-chain analytics firm after the token’s price trebled.
After the price of the Tellor token (TRB) increased 172% in one day before being halved in an hour on December 31st, the team behind the protocol that provides smart contract oracles is now facing charges of market manipulation.
Tellor Tributes (TRB) had a price spike from $231 to $630 in eight hours on December 31, according to data from TradingView. Following some consolidation, the price of TRB dropped drastically from $611 to $195 in the span of an hour. The token’s value fluctuated between $184 and a low of $120 in subsequent trading sessions.
A few whales owned a disproportionate amount of TRB, which led on-chain data service Spot On Chain to notice that the token had reached a new all-time high of $225 on December 29.
“Out of the 2.5 million TRB in circulation, approximately 1.7 million is traded on exchanges, while 660 thousand is held by a group of 20 whales,” Spot On Chain tweeted. “In August and September, the whale group bought these tokens at a good price of $15 per. The whales have been gradually dumping their tokens onto exchanges over the last two months, causing a pump-and-dump cycle to get rid of their holdings.
According to Lookonchain, an on-chain analytics company, the Tellor team may have been involved in the alleged pump-and-dump operation, as they sent $2.4 million worth of TRB to Coinbase around the pump’s peak. In the midst of the uncertainty, Lookonchain reports that around $68 million worth of TRB liquidations were handled.
As a result of the extreme market volatility, the long-running DeFi project Synthetix v2, which powers many decentralized derivatives protocols, went into debt—about $2 million worth. Stakeholders in Synthetix lost money.
“Some traders abused yesterday’s TRB pump to enter into outside positions that left the debt pool at $2 million,” said Adam Cochran of Synthetix in a tweet. “In tail-risk scenarios, such as yesterday, the pool loses and spends the money on socializing.”
Chaos Labs’s creator, Omer Goldberg, stated that Synthetix had set the open interest (OI) limit for its TRB pool in token itself, implying that the issue might have been prevented if the limit had been established using a value in fiat money.
According to what Goldberg tweeted, “the market is fully exposed to the TRB pump” since the OI limits were set in TRB tokens instead of the notional USD value. The limit increased from 250,000 USD to 12.5 million USD in under six hours, reaching its peak during the pump.
Cochran concurs and proposes a “dual cap system” that uses “volatility circuit breakers” in addition to the native token’s price and the US dollar’s value to establish limitations.
But, as Cochran pointed out, Synthetix v3 is already in the works; thus, any technical resources put into improving v2 would just delay the new protocol’s development.
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