Mantra (OM) Crash: Red Alert on Liquidity Risks and Market Manipulation
The sudden collapse of the Mantra (OM) token wiped out more than $5 billion in market capitalization in just a few days, raising serious questions about the transparency, liquidity, and manipulation risks of DeFi platforms.
From Peak to Decline: OM Loses 90% of Value
Over the past week, the Mantra project's OM token fell from a peak of $7.09 to just $0.4823, before recovering slightly to $0.8213 on April 15. However, OM is still down about 90% from its peak last week, indicating the severity of the damage.
A report from data analytics firm Kaiko has delved into the reasons behind the event, and what they found sheds light on vulnerabilities in the broader DeFi ecosystem.
Low liquidity – the “silent killer”
Kaiko said: The lack of liquidity, combined with the large-scale liquidation, led to a complete collapse of the OM market.
OM’s market depth dropped from $290 million to just $473,000, meaning it almost lost its ability to absorb large sell orders.
With no buyers left, the selling pressure spread and dragged down a series of long positions, adding further downward pressure.
Notably, OKX alone recorded $21 million in liquidated positions, creating a death spiral for OM prices.
Internal whales and suspected market manipulation
Theories about the collapse do not stop at technical factors. The report also raises the question: Was there dumping behavior from within the project?
According to blockchain investigator Max Brown, the Mantra development team may have held as much as 90% of the OM supply, raising suspicions of price manipulation.
The OddEyeResearch team went further, suggesting that there was a market manipulation scheme, with large transactions being made from CEX wallets to unknown wallets — which they say are directly linked to Mantra.
According to OddEyeResearch, the crash was triggered by a member “betraying the plan,” either by dumping or forced liquidation, which caused widespread panic in the market.
CEO speaks out — but not transparent enough
Mantra CEO JP Mullin has denied the allegations, citing forced liquidations on the exchange as the main cause of the crash. However, internal transactions on CEX exchanges are not as transparent as on-chain, making it impossible for analysts and the community to verify project claims.
A wake-up call for the entire DeFi industry
The Mantra incident is not just a token crash – it is a harsh warning for the DeFi ecosystem:
Low liquidity remains a critical weakness for many projects.
Internally concentrated supply can lead to similar crashes.
Lack of transparency from CEXs makes it impossible for the community to verify behind-the-scenes behavior.
Conclusion
Although OM is showing signs of a slight recovery, confidence in Mantra remains extremely low. The story of OM is not just an “accident” – it is a valuable lesson for DeFi investors and developers that lack of transparency and liquidity can lead to serious and unforeseen consequences.
