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Rumors of the arrest of the Multichain team have sent shockwaves across the Phantom ecosystem. Fear, uncertainty and doubt (FUD) resulted in a 5x increase in daily bridging volume, despite trading volume of $129 million. However, upon closer examination of the on-chain data, bridging volumes do not show a significant sign of panic.
Phantom’s Risky-Wrapped Token Exposure
according to a twitter thread By crypto researcher DeFi Ignas, Phantom (FTM) is the most exposed of Multichain’s wrapped tokens. This suggests that Phantom is particularly vulnerable to any negative effects that could result from the rumored arrest of the Multichain team. This is because Phantom has significant exposure to Multichain’s wrapped tokens, with 35% of its total value locked (TVL) dependent on these wrappers.
In addition, Multichain issued 40% of non-FTM assets, which is equivalent to $650 million. This means that if anything happens to Multichain, it could have a significant impact on the overall value of these assets.
Furthermore, Multichain handles 81% of the total stablecoin market capitalization of Phantom. Stablecoins are digital assets that are pegged to the value of a real-world asset, such as the US dollar. They are often used as a way to hedge against market volatility. However, if anything happens to Multichain, it could have a significant impact on the value of these stablecoins and create instability in the Phantom ecosystem.
Phantom Investors Keep Calm Amidst MultiChain Arrest Rumors
According to Ignas, there should have been a significant outflow of total value locked up from Phantom due to its reliance on MultiChain. However, data shows that the amount withdrawn was only 1% of its total TVL of $1.78 billion, which indicates that there is not much panic in the market.
Furthermore, while TVL has fallen by 9.55% in USD, adjusting for the FTM price does not show any significant outflow of capital. The most obvious and only sign of panic on Phantom is MultiChain Liquidity Providers (LPs), with a total of $33 million being pulled out by LPs from Phantom, and only $1.7 million in deposits.
However, of most concern is the lack of communication from the Multichain team. It is reported that Zhaojun, the current CEO of Multichain, has not been online for a week. This has left many investors and traders feeling uncertain about the future of the project in the cryptocurrency market.
Additionally, Multichain has reported that some cross-chain routes are unavailable due to an unforeseen event and that the Kava, zkSync, and Polygon zkEVM routes have been temporarily suspended. There were also 83 transactions pending for more than a day, which has raised concerns among investors and traders.
Featured image from Unsplash, chart from TradingView.com
