Mantra and associated market makers would have manipulated liquidity statistics for the reversal by exploiting vulnerabilities in the self-reporting systems of data aggregators, according to discussions about the discussions about the Last edition From the podcast “The Chopping Block”.
The scheme included the wrong representation of the circulating offer and trade volume of to create the appearance of broader market activity than existed.
Podcast participants explained that the Mantra team worked with market makers to simulate the trade volume. This included bicycle sticks between controlled addresses and exchanges to blow up volume figures without significant organic participation.
As a result, a top 25 seemed to be active due to market capitalization, despite the fact that less than 1% of the token stock was really liquid, according to observers in the chain.
The tactic was based on gaps in the validation processes of Coingecko and Coinmarketcap. Both platforms are mainly dependent on self-reported data from project teams, cross-allegations with states about important trade fairs and blockchain analyzes at surface level.
However, motivated actors can bypass these checks by allocating tokens to market makers and orchestrating the activities that superficially reflect biological trade, even when the participation of the retail trade is absent.
The manufactured liquidity then collapsed a large to liquidate, so that a Price decrease of 90% within 90 minutes. As participants in the podcast noticed, the incident knew billions in market capitalization and revealed the vulnerability of the actual trade depth of the active.
Possible solutions
Industrial figures suggested various solutions to tackle the meshes that make it possible to make it possible.
A suggestion was to require the disclosure of all market agreements as a condition for offering tokens at important trade fairs, such as Binance and Coinbase.
Transparent disclosure would reveal whether the support for the trade volume is a real distribution or mainly orchestrated by stimulated liquidity regulations.
This concept reflects practices in traditional finances, where securities applications reveal market contracts for public shares.
In Crypto -markets, such disclosures discount structures, loan conditions, stock risk trials and any volume garrisons should include market makers.
Another discussed solution was improved verification of token distribution claims. Exchange and data aggregators can implement stricter validation standards on the chain, including wallet audits and assessments of the concentration of wallet ownership, to ensure that reported circulating supplies are independent.
Challenges
Participants, however, recognized potential challenges. Market makers can resist disclosures to protect their own regulations, and exchanges may be confronted with higher operational costs.
Moreover, there is also a risk that enforcement without regulatory support can lead to unequal acceptance on different platforms, so that bad actors can be created to use arbitration.
Despite these obstacles, the consensus on the podcast was that coordinated action could significantly reduce the issue by large stock exchanges.
If leading locations required transparency for new offers, projects that look for legitimate liquidity access would have strong stimuli to satisfy, so that practices are possible that uses user confidence and market stability.
The collapse of OM and the allegations surrounding the liquidity practices have renewed the control of data reporting standards in the crypto industry.
