OKX, a leading crypto exchange, witnessed its native token plummet by 50% in a sudden flash crash. This unexpected event led to a rise in anxiety among investors, sparking worries about the overall stability of the OKB token. In response, the OKX team has officially acknowledged the crash and introduced a compensation scheme to address the losses faced by those affected during this incident.
OKB Token Faces A Series Of Liquidations
The cryptocurrency exchange OKX has announced plans to provide compensation to users impacted by a rapid decline in the value of its OKB token, which occurred today.
The OKB token experienced a drastic 50% drop in value at around 9 am GMT on Tuesday, dropping from $52.4 to $25.10 in under 15 minutes. This plunge erased approximately $6.5 billion from its diluted market cap, although the token later recovered significantly. As of this report, OKB is trading at $47, declining over 10% from yesterday’s rate.
In a statement, OKX staff explained the situation by stating that the initial surge of the token to 48.36 USDT triggered a series of liquidations involving significant leveraged positions. This, in turn, caused a market impact that further decreased the price. The staff noted that this led to more liquidations across pledged loans, leveraged transactions, and cross-currency trades, resulting in a rapid decline of the token’s price to 25.1 USDT within a short period.
OKX Announces Compensation Plan
The recent rebound was backed by an increase in trading volume, soaring by 2100% to reach $80 million within 24 hours. OKX has released a statement regarding the recent market volatility, in which they have committed to fully compensating users for any additional losses that were a result of abnormal liquidations. The statement further mentioned that OKX will announce the specifics of the compensation plan within the next 72 hours. Moreover, the platform is planning to improve its spot leverage gradient levels, the risk control rules for pledge lending, and the liquidation mechanisms to help prevent similar issues in the future.
Flash crashes are not uncommon in the crypto markets, often occur due to the relatively thin liquidity spread across various platforms. For OKB, the 2% market depth – which indicates the amount of capital required to move the asset’s price by 2% – ranges between $224,000 and $184,000. This implies that a sell order exceeding $224,000 has the potential to trigger another steep decline in price.
OKX has been extending its global influence recently and is aiming to adhere to the regulations of FIU India. TokenInsight, a company specializing in token data and ratings, has reported a shift in the market. According to their findings, Binance has experienced a 5% decline in its market share, while competitors OKX and Bybit are making significant strides in the industry. Notably, Binance’s market share has seen a substantial decrease, falling from 54.2% to 48.7% in the year 2023.