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Following a sudden plunge in the value of its native token OKB, which fell over 50% in a matter of minutes, Okx exchange has committed to developing a compensation plan for users caught in the resultant wave of automatic liquidations.
Okx Exchange to Roll Out Compensation After Unexpected OKB Token Flash Crash
Okx exchange experienced a flash crash of its native token, OKB, which plunged over 50% in value on Jan. 23. The sudden drop in price, from $50.69 to a low of $25.10, caused a flurry of automatic liquidations of margined positions, leading to a brief period of intense volatility. Okx has since stabilized the situation and is actively developing a compensation plan for the affected users.
This abrupt price movement occurred at 9:07 a.m. UTC, with the token recovering to trade at $47.27. Okx, in a statement, attributed the volatility to the automatic liquidation of several margined positions after the token’s value fell from $50.69 to $48.36.
Okx has acknowledged the unusual nature of this event and extended apologies to the impacted users. It stated, “Compensation will be provided to users who experienced losses as a result of abnormal liquidations, including users of flexible loan, margin trading and multicurrency trading products.” A detailed plan regarding the compensation is expected to be released within the next 72 hours.
Furthermore, Okx is investigating enhanced risk management controls and liquidation mechanisms to prevent future similar occurrences. The exchange’s response includes a promise to optimize various aspects of its trading platform, including spot leverage levels, pledged lending risk control rules, and liquidation mechanisms.
Despite the swift recovery of OKB’s price to around $47.00 and a significant increase in trading volume, concerns about market depth and liquidity remain. The crypto market, known for its volatility, poses risks where significant sell orders can trigger price cascades due to the thin liquidity spread across multiple trading venues. OKB, with a market cap of $2.8 billion, ranks as the fourth-largest exchange token by circulation.
How do you think Okx handled this situation? Share your thoughts and opinions about this subject in the comments section below.
