OKX’s native exchange token, OKB, experienced a flash crash, plummeting by more than 50% in just three minutes. This sudden drop was triggered by a series of liquidations due to an abnormal price fluctuation.
The token’s value dropped from a high of $50.34 to a low of $25.17 before recovering to $47.75. The 24-hour trading volume surged by 2,100% to $79 million, according to CoinMarketCap. OKX, one of the leading cryptocurrency exchanges, confirmed that it would compensate users for losses caused by the liquidation cascade, including on-chain trades.
Today, OKB experienced unexpected volatility. The market has quickly stabilized, and we're actively developing a compensation plan, set to be finalized within 72 hours.
We apologize for any inconvenience caused and are committed to enhancing our risk management protocols.… pic.twitter.com/GxJ2M0dOS3
— OKX (@okx) January 23, 2024
“The platform will fully compensate users for additional losses caused by abnormal liquidation, including pledge lending/margin trading/cross-currency transactions,” OKX wrote. The specific compensation plan will be announced within 72 hours.
Flash crashes are not uncommon in the crypto markets, where thin liquidity is often distributed across multiple venues. For OKB, the market depth of 2%, a metric that quantifies the capital needed to alter the asset’s value by 2%, ranges from $224,000 to $184,000. This indicates the liquidity and stability of the OKB market. This means that a sell order of more than $224,000 could trigger another price cascade.
OKX Remains Strong Despite Recent Token Crash
With a market capitalization of $2.8 billion, OKB holds the position as the fourth most significant exchange token currently in circulation, as reported by CoinGecko. This underlines the substantial presence of OKB in the market. Despite the flash crash, OKB remains a significant player in the crypto market. OKX has pledged to further optimize spot leverage gradient levels, lending risk control rules, and liquidation mechanisms to prevent similar problems from happening again.
In light of the current market indicators, the immediate future of OKB appears to be trending downwards. However, these indicators also hint at a more intricate scenario. Despite the prevailing bearish trends, the potential for a reversal or a steadying of the market cannot be ruled out.
This incident serves as a stark reminder of the volatility and risks inherent in the crypto market, even for major tokens like OKB. As the dust settles, the crypto community will be watching closely to see how OKX handles this situation and what measures it will implement to safeguard against future flash crashes.
The incident also underscores the need for investors to exercise caution and conduct thorough research before diving into the volatile world of cryptocurrencies.