The native token of the Cosmos-based Kujira blockchain experienced a dramatic 40% decrease in value today, plummeting from $0.97 to $0.57. This severe drop was triggered by the liquidation of positions held by the Kujira Foundation’s operations wallet. The foundation’s risky strategy involved using millions of dollars in leveraged liquidity provisions on its decentralized finance (DeFi) platform, which backfired due to poor management.
Operational Decisions Backfire
Intent on enhancing liquidity and fostering activity on its decentralized exchange (DEX), the foundation utilized operational funds in leveraged positions. According to a statement released on Telegram, the foundation aimed to “bootstrap liquidity and activity” across the Kujira ecosystem.
However, these positions became undercollateralized as market conditions fluctuated, leading to automated liquidations. The resulting sell-off exacerbated the drop in the token’s price.
Foundation Acknowledges Missteps and Market Impact
The series of liquidations not only affected the foundation’s financial stability but also the broader Kujira community. Current data from Pulsar Finance indicates that the foundation’s wallet still carries a significant debt of $2 million.
In light of these events, the foundation has publicly taken responsibility and extended an apology for the adverse effects on the market. “Although temporary, we realize that it hurts and we are sorry,” a spokesperson commented, recognizing the broader impact of their strategic errors.
Kujira continues to operate as a key player in the Cosmos ecosystem, offering services like a lending platform and a decentralized stablecoin, USK. Despite the setback, the blockchain maintains a total value locked of over $42 million, signaling some resilience in its foundational operations and community trust.
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