OM Token Crashes 90%: Unpacking MANTRA's Supply Controversy and Liquidation

On April 13, MANTRA, a blockchain project focused on decentralized finance (DeFi) and real-world asset tokenization (RWA), saw its native token OM undergo a catastrophic price collapse. According to data from Coinglass, the token plummeted from approximately $5.26 to a low of $0.51 within an hour, marking a decline of over 90% and wiping out more than $4.3 billion in market capitalization. Although OM's price slightly rebounded, it remained around $0.85 at the time of reporting.

According to data from Coinglass, the total liquidation amount across platforms in the past 24 hours reached $68.91 million. Long positions accounted for $49.73 million, making up 72.1% of the total liquidation amount, while short positions amounted to $19.19 million, representing 27.9%.

The dramatic volatility quickly sparked heated discussions within the crypto community. The community attributed the crash to a suspected unauthorized increase in token supply and alleged large-scale sell-offs by the project team. On X, several users pointed out that OM's token supply seemingly doubled from 888 million to 1.77 billion without community voting, with over 70% of the tokens held by the team and market makers.

Additionally, on-chain analyst Lookonchain reported that since April 7, at least 17 wallet addresses deposited a total of 43.6 million OM tokens (worth approximately $227 million at the time) to exchanges, accounting for 4.5% of the circulating supply. Among these, two addresses were linked to MANTRA Chain's strategic investor, Laser Digital, according to Arkham tags.

MANTRA aims to tokenize real-world assets like real estate and commodities through blockchain technology and provide DeFi solutions. In 2024, OM's price surged above $8 due to the RWA narrative, attracting numerous retail and institutional investors. However, the community has long criticized the project's tokenomics. OM was initially designed for ecosystem incentives, airdrops, and governance, but recent decisions have exposed its centralization risks.

The community accused the MANTRA team of significantly increasing the token supply without consulting the community, diluting holder value. Moreover, OM's airdrop activities have sparked controversy. The project initially promised rewards for testnet and event participants, but subsequent rules were arbitrarily adjusted, even disqualifying 70% of participants. The Sybil detection conducted by the project team during the airdrop has faced criticism for its lack of transparency. The community criticized that MANTRA's Sybil detection lacks clear criteria, resulting in the erasure or restriction of holdings for some legitimate users. These negative factors have led to strong dissatisfaction among the community, with many early participants publicly accusing the team of "betraying the community" and calling for strict regulation of OM tokens.

In response to community concerns, the MANTRA team released a statement on the evening of April 13, claiming that the abnormal OM fluctuations were caused by "reckless liquidations" rather than team operations, and stated that they are investigating the specific reasons, promising to release details soon. On April 14, project founder JP Mullin further clarified that the severe market volatility of OM was due to forced liquidations by centralized exchanges on account holders during low liquidity periods, possibly due to exchange negligence or market manipulation. He denied rumors of team or investor sell-offs, asserting that the tokens remain locked. Mullin also announced plans to host a community meeting via platform X in the coming hours to address questions and urged users to be wary of online scams.

Binance's role in this incident also drew widespread attention. Binance founder Changpeng Zhao advised investors post-crash to "don't chasing narratives" and focus on projects with "users, revenue, and profits." When the community questioned Binance's due diligence on OM's listing, Zhao responded that exchanges should not have complex listing processes but should provide access to all global tokens, allowing traders to decide their trading targets. In JP Mullin's reply to comments about his statement, he emphasized that the crash was not caused by Binance.