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Crypto Exchange OKX's Token Suffers 50% Flash Crash Amid Liquidation Cascade
The exchange said that it will compensate impacted users within 72 hours.
Updated Mar 8, 2024, 8:20 p.m. Published Jan 23, 2024, 3:32 p.m.
OKX's native exchange token [OKB] slumped by more than 50% in just three minutes on Tuesday following a series of liquidations triggered by an abnormal price fluctuation.
OKB has since recovered from a low of $25.17 to $45.64, with 24-hour trading volume rising by 2,100% to $79 million, according to CoinMarketCap.
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The exchange confirmed that it will compensate users for losses caused by the liquidation cascade, including on-chain trades.
"The platform will fully compensate users for additional losses caused by abnormal liquidation, including pledge lending/margin trading/cross-currency transactions," OKX wrote on X. "The specific compensation plan will be announced within 72 hours. We will further optimize spot leverage gradient levels, pledged lending risk control rules and liquidation mechanisms to avoid similar problems from happening again."
Flash crashes are common in crypto markets as thin liquidity is often distributed across multiple venues. Two percent market depth, which measures the amount of capital required to move an asset by 2%, is between $224,000 and $184,000 for OKB, meaning that a sell order of more than $224,000 could cascade price again.
OKB has a market cap of $2.8 billion, making it the fourth-largest exchange token in circulation, according to CoinGecko.
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