OKX, a cryptocurrency exchange, unveils compensation plan in response to OKB’s 50% flash crash.
OKX, a prominent cryptocurrency exchange, has witnessed a sudden and drastic decline of 50% in the value of its native token, causing concern among investors regarding the stability of the OKB token. In response, the OKX team has officially acknowledged the flash crash and introduced a compensation plan to address the losses suffered by those affected.
The flash crash occurred today, leading OKX to announce its plans to compensate users impacted by the rapid decline in the value of the OKB token. At around 9 am GMT on Tuesday, the OKB token experienced a significant drop in value, plummeting from $52.4 to $25.10 in less than 15 minutes. This sudden decline wiped out approximately $6.5 billion from its diluted market capitalization. However, the token has since recovered to some extent. As of now, OKB is trading at $47, reflecting a decrease of over 10% compared to the previous day.
According to the OKX team, the initial surge of the token to 48.36 USDT triggered a series of liquidations involving substantial leveraged positions. This subsequently caused a market impact that further pushed down the price. The team noted that this resulted in additional liquidations across pledged loans, leveraged transactions, and cross-currency trades, leading to a rapid decline in the token’s price to 25.1 USDT within a short period.
In response to the unexpected volatility, OKX has stabilized the market and is actively developing a compensation plan that will be finalized within 72 hours. The exchange apologizes for any inconvenience caused and is committed to enhancing its risk management protocols.
The recent rebound in the OKB token’s value was accompanied by a significant increase in trading volume, soaring by 2100% to reach $80 million within 24 hours. OKX has released a statement assuring users that they will be fully compensated for any additional losses resulting from abnormal liquidations. The specifics of the compensation plan will be announced within the next 72 hours. Additionally, the platform intends to improve its spot leverage gradient levels, risk control rules for pledge lending, and liquidation mechanisms to prevent similar issues in the future.
Flash crashes are not uncommon in the cryptocurrency markets, often occurring due to the relatively thin liquidity spread across various platforms. In the case of 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 means that a sell order exceeding $224,000 has the potential to trigger another significant decline in price.
OKX has been expanding its global influence and aims to comply with the regulations of FIU India. TokenInsight, a company specializing in token data and ratings, has observed 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 progress in the industry. Notably, Binance’s market share has seen a substantial decrease, falling from 54.2% to 48.7% in 2023.