Cryptocurrency exchange OKX announces compensation plan following OKB’s 50% flash crash
Leading cryptocurrency exchange OKX saw its native token plummet by 50% due to a sudden flash crash. These unexpected events amplified investor anxiety, raising concerns about the overall stability of OKB tokens. In response, the OKX team officially acknowledged the crash and introduced a compensation scheme to address the losses faced by those affected by the incident.
OKB token faces a series of liquidations
Cryptocurrency exchange OKX has announced plans to provide compensation to users affected by the sharp decline in OKB token value that occurred today.
OKB tokens plummeted 50% in value around 9am GMT on Tuesday, falling from $52.4 to $25.10 in less than 15 minutes. The plunge erased about $6.5 billion from its diluted market capitalization, but the token later recovered significantly. As of this report, OKB is trading at $47, down more than 10% from yesterday’s exchange rate.
In a statement, OKX staff explained the situation, saying that the token’s initial surge to 48.36 USDT triggered a series of liquidations involving significant leveraged positions. This eventually had an impact on the market, driving prices down further. The staff member noted that this led to more liquidations in collateralised, leveraged and cross-currency trades, causing the token price to drop sharply to 25.1 USDT within a short period of time.
OKX Announces Compensation Plan
The latest rebound was fueled by increased trading volume, which saw the stock surge 2100% in 24 hours to $80 million. OKX recently released a statement regarding market volatility and promised to fully compensate users for any additional losses incurred due to abnormal liquidations. The statement added that OKX will announce specific details of its compensation plan within the next 72 hours. The platform also plans to improve spot leverage gradation levels, risk control rules for collateralized lending, and liquidation mechanisms to prevent similar issues in the future.
Flash crashes are not uncommon in the cryptocurrency market, often due to the relative lack of liquidity distributed across various platforms. For OKB, the 2% market depth, which represents the amount of capital required to move the asset price by 2%, ranges from $224,000 to $184,000. This means that a sell order above $224,000 is likely to trigger another sharp decline in the price.
OKX has recently been expanding its global footprint and is targeting compliance with FIU India. TokenInsight, a company specializing in token data and valuation, reported the market shift. According to the findings, Binance has lost 5% of its market share, while its competitors OKX and Bybit are making significant progress in the industry. In particular, Binance’s market share decreased significantly from 54.2% to 48.7% in 2023.