Review Report on the Death of TITAN Giant | IRON identified as the most disastrous run on a functioning basis, no compensation plan reported

"We never thought this would happen, but it did. We experienced the world's first large-scale bank run." Iron Finance wrote in a post-mortem report after its governance token TITAN went to zero.

The Death of a Giant, Post-mortem Begins

An Apparently Ordinary Situation

The official statement revealed that at 10 a.m. UTC on June 16, which is 6 p.m. Taiwan time on June 16, Iron Finance noticed large holders starting to withdraw liquidity from IRON/USDC and selling TITAN for IRON, then selling IRON for USDC instead of redeeming IRON for USDC and TITAN, causing the price of IRON to deviate from its pegged price.

Subsequently, TITAN dropped from $65 to $30 within two hours, then quickly rebounded to $52 within an hour, and IRON returned to its pegged price.

Since Iron Finance's protocol was functioning normally and IRON had deviated from its pegged price before, the mechanism behaved as expected, so the officials considered these events normal.

Confidence in Deviations from Price

The officials believed that, given the extensive research on the well-known algorithmic stablecoin FRAX, past forked projects had flaws in maintaining a pegged price in the long run. This led to the invention of Iron Finance's dual-token collateral ratio mechanism, which was verified to be viable.

Delayed Price Discrepancies Lead to the Death of the Giant

According to the officials, around 11 p.m. Taiwan time on the same day, a few large holders began dumping again. This caused panic among users, who started redeeming IRON for USDC and TITAN, then selling TITAN.

Due to the operation of the 10-minute TWAP (Time-Weighted Average Price) oracle, the IRON price given in the IRON redemption mechanism by TWAP could not keep up with the magnitude of the changes in the spot price of IRON. This created a negative feedback loop as IRON was continuously redeemed, causing more TITAN to flow out and the price to decline rapidly. This ultimately led to a bank run, with the price of TITAN going to zero.

As per the officials, at the time of writing the post-mortem report, there were 27.805 trillion TITAN tokens in circulation.

No Compensation Plan Yet, Second Generation to be Introduced

Currently, Iron Finance has not mentioned any compensation plan. The officials also clarified that this was not an exit scam or an attack; it was simply the worst-case scenario in their economic model. They are currently seeking third-party analysis to understand the impact of all the circumstances on the outcome.

Lastly, the officials also promoted IronBank lending and the IronSwap pegged asset exchange protocol, hinting at the upcoming Iron Finance 2.0.