In the latest surprise to hit the DeFi world, the ICHI token collapsed in price by a whopping 99%, followed by a rebound today by 300%..
This follows a series of high-profile failures in the DeFi space, which have called into question the viability of this nascent industry. ICHI offers branded dollars, kind of like a fake stablecoin without any backing in actual dollars. Crypto Lists Ltd believes that might be one of the major problems for ICHI, that potential investors are worried about such moves and think that FED or the U.S government will crack down on such “made up dollars”. You can not just invent dollars as stablecoins on the Ethereum blockchain, without getting into trouble – sooner or later.
How did this price drop happen?
It is still unclear exactly how this happened, but it seems that HI-ROAD’s smart contract was somehow exploited in the process. As it turns out, this allowed the attacker to mint an unlimited number of ICHI tokens, which they then sold on the open market. The price of ICHI plummeted as a result, and as a knock on effect, HI-ROAD is now considered as insolvent.
This is yet another black eye for the DeFi industry, which has been plagued by scams and hacks in recent months. This latest incident is likely to further damage confidence in this still-emerging sector of the cryptocurrency market. Only time will tell if DeFi can recover from this latest setback.
What does this mean for HI-ROAD’s investors?
Unfortunately, this means that HI-ROAD’s investors are likely to lose all of their money. The company is insolvent and there is no way to recover the lost funds. This is a harsh reality of investing in early-stage companies, especially in high-risk industries like DeFi.
Is ICHI’s branded dollar the problem?
ICHI has supported the creation of what they call “branded dollars for leading cryptocurrency communities”. In reality, it’s “fake dollars” or “invented dollars” – by ICHI. They are likely to get into trouble in the U.S with this kind of offering. ICHI offer crypto communities to mint dollars worth 1 USD. it’s minted with each community’s own cryptocurrency. The idea is that the ICHI’s branded dollar token should be redeemable 1-for-1 for USD Coin (USDC). Without any backing, Crypto Lists believe this attempt will get in major trouble sooner or later and could lead to an even bigger price drop. Crypto Lists don’t review coins and tokens that we find suspicious, fraudulent or super risky – and that’s why we haven’t made a review of ICHI token yet.
What does this mean for the DeFi industry?
This latest debacle is likely to further damage confidence in the DeFi industry. Many people are already skeptical of this still-emerging sector of the cryptocurrency market, and this will only add fuel to the fire. Only time will tell if DeFi can recover from this latest setback.
With more and more money pouring into DeFi projects, it seems only a matter of time before another major failure occurs. This could well be the death knell for this young industry, which has so much promise but remains to be hampered by technical limitations. We will have to wait and see whether DeFi can overcome these obstacles and emerge stronger or if it will succumb to the pressure and collapse.
In the meantime, many are calling for greater regulation of the space in order to protect investors from these kinds of losses. Whether or not this will happen remains to be seen, but it seems clear that the DeFi industry is in need of some serious reform if it is to survive.
How to avoid such pitfalls in future?
Investors need to be more careful when investing in early-stage companies, especially in high-risk industries like DeFi. They should do their own research and due diligence before investing, and should only invest what they are willing to lose.
The DeFi industry also needs to mature and evolve if it is to survive. This means better regulation and more safeguards for investors. Only time will tell if the industry is up to the challenge.
In the meantime, be sure to do your own research before investing in any DeFi project. And as always, remember to DYOR (Do Your Own Research).
How does this affect the crypto industry?
This latest debacle is likely to have a negative impact on the crypto industry as a whole. The DeFi industry is still in its infancy and is plagued by scams and hacks. This will only damage confidence in the space and could lead to more regulation. This could also hamper innovation and growth in the industry. Only time can determine how this latest setback will affect the DeFi industry and the crypto industry as a whole.
The collapse of the ICHI token is just the latest in a series of major issues to hit the DeFi space. If stablecoins don’t get regulated better – we’re likely to see way more sharp drops like this in the future.