In Token Crash Postmortem, Iron Finance Says It Suffered Crypto’s ‘First Large-Scale Bank Run’

In Token Crash Postmortem, Iron Finance Says It Suffered Crypto’s ‘First Large-Scale Bank Run’

A near-total collapse in the price of a share token of a decentralized finance (DeFi) protocol was “the world's first large-scale crypto bank run,” the people behind Iron Finance said in a blog post providing a postmortem. The run brought the worth of the protocol down from $2 billion to near zero on Wednesday.

A “negative feedback loop” was created when a series of large holders tried to redeem their IRON tokens and sell their iron titanium (TITAN), the token of the Iron Protocol, the post said. That, in turn, caused more TITAN holders to run for the virtual hills, leading to what the team labeled “a classic bank run.”

“What we just experienced is the worst thing that could happen to the protocol, a historical bank run in the modern high-tech crypto space,” the post said.