Ichi, a defi project that allows other projects to create their own stablecoins suffered cascading liquidations in its Rari pool, leading to a token price crash. Rari is a protocol that allows users earn yields on liquidity pools for various assets. Ichi’s liquidity pool on Rari was set up with an extremely high collateral factor (85%) and no supply caps, which allowed borrowers to borrow more $ICHI to use as collateral than actually existed in the liquidity pool, with many borrowing $ICHI to buy more $ICHI. As borrowers did this, the price briefly spiked from the token’s early April price of around $70 to $139 before plummeting to below $2.One Rari developer blamed Ichi for the disaster, writing, “Fuse is a permissionless protocol. Pool operators are responsible for following best practices to avoid situations like this one”. Rari Capital’s official Twitter account also blamed Ichi, stating, “This is a permissionless pool that is owned and operated by Ichi. We hope to see an announcement from Ichi regarding redemption strategies and next steps to make users whole.“In the FAQ about the incident, Ichi wrote that they had allowed such a high LTV ratio in the pool because they expected “users would make responsible decisions that would benefit the community”. There is currently around $30 million of bad debt in the liquidity pool.

Total loss estimated at $30,000,000.