An almost complete collapse of a coin was the ‘world’s first large-scale cryptocurrency bank run’ according to Iron Finance. The run lowered the value of the company down to almost zero from $2 billion.
A ‘negative feedback loop’ started when a number of bigger stakeholders tried to get hold of their IRON coins and sell their TITAN, which is the coin of Iron Protocol. This caused TITAN investors to do what is called a ‘bank run’.
Iron Finance said that “What we just experienced is the worst thing that could happen to the protocol, a historical bank run in the modern high-tech crypto space”.
The run was possible because Iron Finance is just semi-collateralized. It had just enough for regular day-to-day runnings, but if all of their clients want their money at the same time, the bank isn’t going to be able to provide this.
When everyone tries to take out their money from the bank, it collapses. The run was even more noticeable because Mark Cuban is a famed investor. Since the crash, Cuban is asking that regulators figure out what a ‘stablecoin’ is. Cuban didn’t disclose how much had been lost for him personally in the run, but he said that it was enough that he ‘wasn’t happy about it’.