The Mantra CEO has linked the OM token collapse to excessive leverage and is calling for serious reforms to stabilize the crypto industry.
Risky leverage policies are blamed for the OM token crash
Mantra’s OM token crash has ignited a wider discussion about systemic risks in the crypto market. Mantra CEO John Mullin said in a public statement that risky leverage practices on centralized exchanges were the biggest contributing factor to the collapse of FTX.
Given Mullin, the crash was worsened by cascading liquidations caused by extremely leveraged trading positions. As a result of the domino effect, the price of OM dropped, affecting investors and the project itself. Mullin said, “This can happen to any token.” “ It’s not only a Mantra issue.
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A Call for Industry-Wide Reform
To combat the current crisis, Mantra is working closely with major trading platforms to push for better leveraged production policies. Mullin, a U.S. Congress Democrat from the U.S., called on other leaders from the crypto industry to work together to help safeguard the financial system from collapses like FTX.
Even though Mullin did not specify any exchange by name, he criticized the practice of allowing users to leverage positions with their project’s tokens. He claimed that the practice is an unnecessary risk to the projects and their communities. He said, “We know why some exchanges allow it, but that does not change the fact that the practice puts projects and their community at risk.”
As calls for reform heat up, major exchanges have stayed silent on the matter, which has frustrated the crypto community and fueled speculation. People are asking for more functional accountability and transparency for the platforms in high-risk trading.
Mantra’s Plan to Stabilize and Rebuild
In response to the crisis caused by the technological crash, Mantra unveiled a slew of measures to stabilize its ecosystem.
Decentralization Efforts
The company intends to cut down on internal validators and introduce 50 independent validators by mid-2025, which signifies greater decentralization.
Token Supply Reduction
Mantra has already burned 150 million staked OM tokens to lessen supply and curb inflationary pressure.
Transparency Improvements
Users now have increased visibility into the key metrics and performance of the project thanks to a new dashboard.
Technical Enhancements
“Omstead” is an Ethereum-compatible testnet, and the team is testing it for technical performance and security.
Shockingly, the Mantra blockchain remained fully operational despite the crash. Moreover, it was able to process instant all-time high transaction volumes during this period, proving the resilience of the infrastructure.
A Turning Point for the Crypto Industry?
The recent crash of the OM token has hurt Mantra a lot. This proves that we need systemic changes in the crypto market. Mantra is becoming a change agent by urging for safer leverage policies, more transparency, and increased decentralization in the crypto market.
As we assess the consequences of the incident, Mantra suggests a potential shift in risk management within the digital asset industry. The company challenges the crypto ecosystem stakeholders by saying that the objective should be to create a sustainable, long-term environment to protect investors from short-term risks.
All eyes are on Mantra and its peers for now to see what they can do to implement meaningful change in the aftermath of the crash. While it’s uncertain if these efforts will suffice to restore confidence and avert a new crisis, it’s undeniable that the crypto sector must adapt to thrive.
