December 31, 2023, was a wild day for Tellor (TRB) trading since it wiped out over $68 million worth of leveraged positions, while a $2.4 million transfer from the Tellor team to Coinbase has resulted in lots of concerns.
A relatively unknown altcoin known as Tellor (TRB) was thrust into the spotlight after it exploded by 150% to hit a new all-time high of $619 before plunging back to $136 in only 13 hours on December 31.
The strange trading activity of Tellor was also called into question after Etherscan data showed the Tellor team had transferred 4,211 TRB – worth nearly $2.4 million at that time – at about 8:41 pm UTC to a Coinbase wallet at the same time the price spiked.
In the meantime, the abrupt drop in the price of Tellor caused over $68 million in liquidations, based on data from CoinGlass that was later cited by blockchain analytics services Lookonchain in a January 1, 2023, post to the X platform.
In the past 24 hours, $TRB soared to $600 and then plummeted to $137, causing $68M of assets to be liquidated, making it the most liquidated token.
We noticed that the #Tellor team deposited 4,211 $TRB($2.4M) after the price of $TRB skyrocketed.
Address:https://t.co/efHPXCiMiG pic.twitter.com/IBty2Wf2gI
— Lookonchain (@lookonchain) January 1, 2024
Nonetheless, blockchain analytics platform Spot on Chain stated that the wild price swings could also be attributed to 26% of the circulating supply of TRB getting distributed between only 20 ‘whale’ wallets.
The small group of whale addresses started snapping up TRB at prices of almost $15 and has been slowly depositing their holdings to centralized exchanges amid somewhat artificial price movements to lock in high profits, according to Spot On Chain.
🚨🚨 $TRB reached its all-time high today at $225, but what's next?
Current situation:
➡️ Among the 2.5M $TRB in circulation, about 1.7M is on exchanges, and 660K is held by a group of 20 whales (which is ~95% of the tokens).
➡️ The group of whales accumulated these tokens in… pic.twitter.com/kWbZGxEqcv
— Spot On Chain (@spotonchain) December 29, 2023
Tellor is yet to comment on this incident and analysts insist it might be a case of price manipulation.
TRB is the utility token for Tellor, a decentralized oracle network – similar to Chainlink (LINK) – which feeds price data to smart contracts that run on blockchain networks.
Decentralized Derivatives Protocols Caught In This Crossfire
Several decentralized perpetual trading protocols like Synthetix (SNX) and Hyperliquid were caught in this unexpected and unwanted crossfire, with SNX stakers suffering low seven-figure losses after the sudden move in the price of TRB.
Alot of perp dexs are utterly rekt on this TRB pnd.
SNX and Hyperliquid both hit 🎯 Who else? https://t.co/uf5Ju4DrmU
— King 💹 (@0xgodking) December 31, 2023
In a January 1, 2024 post on the X platform, Synthetix founder Kain Warwick published that Synthetix stakers had realized nearly $2 million in losses.
This was allegedly because of a failure in the automated risk parameters on the decentralized protocol, which never recognized that TRB’s price was allegedly getting manipulated to produce abnormal price points.
Interesting start to the new year in @synthetix_io land. SNX stakers incurred ~$2m in losses during the TRB incident today. Not amazing but not world ending either, here are my thoughts.
— kain.eth (@kaiynne) January 1, 2024
Warwick wrote that TRB has a $250,000 open interest cap that Exploded to $12.5 million as its price surged in the last several months.
Interestingly, the open interest cap was set against TRB and not to a fixed notional USD amount – meaning that the traders could continue taking outsized and absurd bets on decentralized derivatives contracts. Warwick added:
“Several short positions were opened as the price spiked today and with the dislocation of spot and perp prices, there was no ARB to balance it. This should have been adjusted back down, but risk controls were lax, and there was diffusion of responsibility. The Spartan Council is responsible for params though.”
Eventually, Warwick concluded that risk management on a decentralized perpetual exchange like Synthetix needed to be ‘baked in’ and could not be resolved via traditional dispute resolution mechanisms such as courts.
“Either you build a robust decentralized trading venue and live by your risk controls or you are just larping as a DEX. I look at these kinds of incidents as the cost of being a dex.”
