IKA Token’s 900% Surge and Crash Triggers $129M Liquidations and Bad Debt on Suilend, Asian Users Hit Hard

In a dramatic turn of events within the Sui ecosystem, the $IKA token, native to the Ika Network, experienced a staggering 900% price surge from $0.04 to $0.40 on September 8, 2025, only to crash back to approximately $0.04.

This volatility triggered a massive short squeeze and liquidation event, particularly impacting the Suilend decentralized lending protocol.

The fallout resulted in significant bad debt, with a 6% haircut imposed on all IKA depositors, disproportionately affecting Asian users who were heavily engaged in the ecosystem.

The Surge, Short Squeeze, and Insider Concerns

The price explosion, as outlined in @willnigri’s interim report, was fueled by a supply squeeze driven by the Ika Network’s penalty-based airdrop mechanism.

The sudden influx of tokens, combined with limited circulating supply, much of which was locked in lending protocols, caught short sellers off guard. @willnigri noted that total borrowed IKA dropped sharply, with large-scale liquidations across multiple platforms:

• Borrowed IKA fell from 197 million to 67.5 million.

• 129.6 million IKA was liquidated across Suilend, Navi, and Alphalend.

Low liquidity on DEX platforms such as FlowX and Turbos, where TVL ranged only between $100,000 and $300,000, further amplified the squeeze. IKA’s price spiked to $0.40 before undergoing a sharp correction. The volatility chart shows a rapid surge followed by a steep decline. As of the latest data, 24-hour trading volume was $18.05 million, and market capitalization stood at $130.25 million.

Additional analysis from @0xTheGeneral raised suspicions of insider activity and mismanagement. The post noted that $IKA withdrawals were paused, followed by an instant 10x pump that triggered millions in liquidated DeFi positions.

Attention also turned to Adeniyi Abiodun, a co-founder of Sui, who celebrated IKA on X shortly after the surge. This timing has fueled speculation of a coordinated dump by insiders, with lending protocols potentially profiting millions.

The incident highlights the risks of extreme price swings in a low-liquidity environment. It also underscores how protocol responses and market dynamics may not always align with the best interests of users.

Bad Debt and the 6% Haircut

The core of the crisis lies in the liquidation process, where Suilend faced a critical shortfall. The rapid price spike led to forced liquidations of leveraged positions, but the protocol’s inability to sell collateral in a low-liquidity environment resulted in bad debt.

Specific figures include:

• Suilend: Liquidated 39.8 million IKA (borrowed dropped from 52.1 million to 12.3 million).

• Navi: Liquidated 32.1 million IKA (borrowed from 52 million to 19.9 million).

• Alphalend: Liquidated 57.7 million IKA (borrowed from 93 million to 35.3 million).

• Total Bad Debt: Estimated at over 129.6 million IKA in unrecoverable loans.

To mitigate this, Suilend imposed a 6% reduction on all IKA deposit balances, a measure confirmed after the protocol’s urgent suspension of the IKA market.

Based on the image, the current deposited value stands at $9.41 million, with a borrowed value of $633,000, reflecting the post-liquidation state on Suilend.

The utilization rate of 6.73% and a 30.10% borrow APR indicate a market still recovering from the event. The 6% haircut, resulting in a loss of approximately $600,000 to depositors, was necessary to absorb the bad debt, estimated at around $6 million.

Disproportionate Impact on Asian Users

Asian users have been disproportionately affected by this crisis, given their significant participation in the Sui and Ika ecosystems.

Community feedback provides insight into the scale of the impact. @Rav_Hedda, a Chinese-speaking user, noted: “This morning IKA spiked from $0.039 to $0.40, but unfortunately I was asleep at the time and by the time I woke up, it had already fallen back to the original price. The worst hit were lending users, with a total of 268 victims liquidated for $45 million worth of IKA.”

Similarly, @The_Wooo, another user from the Asian community, criticized the market makers, accusing them of manipulating IKA’s price in a way that harmed investors, using aggressive tactics and high APY incentives to draw participants into the ecosystem. This highlights the financial toll of the event and the concerns voiced within Asia’s active DeFi user base.

The 6% haircut further compounds the damage, reducing balances for depositors who held long positions, many of whom are likely based in Asia, where Sui’s user base is notably strong.

Community Reaction and Calls for Accountability

The fallout from the IKA incident has sparked widespread debate across the Sui community and beyond. A tweet from Sui co-founder Adeniyi Abiodun celebrating the $1 million pump drew particular scrutiny, with critics questioning the transparency of protocol leadership and the adequacy of risk management frameworks.

These reactions highlight the erosion of trust among active participants. While some users reaffirmed support for Sui, the consensus is that the IKA crisis has underscored systemic vulnerabilities—namely the fragility of liquidity, inadequate safeguards against manipulation, and the need for greater accountability from leadership.

The incident leaves open questions about how protocols within the Sui ecosystem will rebuild confidence, manage future volatility, and ensure that user protection takes precedence over short-term market moves.