Rumors of the Multichain Team’s arrest sent shockwaves throughout the Fantom ecosystem. Despite the $129 million trading volume, Fear, Uncertainty and Doubt (FUD) led to a 5x increase in daily bridging volumes. However, upon closer examination of the on-chain data, bridging volumes do not show a significant sign of panic.
Fantom’s Risky-Wrapped Token exposes exposure
according to Twitter topic By DeFi crypto researcher Ignas, Fantom (FTM) is the most exposed encapsulated Multichain token. This indicates that Fantom is particularly vulnerable to any negative impact that might result from the rumored Multichain Team’s arrest. This is because Fantom has a large exposure to encapsulated Multichain tokens, with 35% of its total value locked (TVL) based on these encapsulations.
In addition, Multichain issues 40% of the non-FTM assets, which is equivalent to 650 million USD. This means that if anything were to happen to Multichain, it could have a significant impact on the overall value of these assets.
Moreover, Multichain handles 81% of Fantom’s total stablecoin market capitalization. Stablecoins are digital assets pegged to the value of a real asset, such as the US dollar. It is often used as a way to hedge against market volatility. However, if anything happens to Multichain, it could have a huge impact on the value of these stablecoins and cause instability in the Fantom ecosystem.
Fantom investors are staying quiet amid multiple arrest rumors
According to Ignas, there should have been a significant influx of total value locked from Fantom due to its reliance on Multichain. However, the data shows that the amount withdrawn was only 1% of TVL’s total of $1.78 billion, which indicates that there is not much panic in the market.
Moreover, while TVL is down 9.55% in USD terms, the FTM price adjustment does not show a significant inflow of capital. The clearest and only evidence of panic is the Multichain Liquidity Providers (LPs) on Fantom, with a total of $33 million withdrawn by Fantom LPs, and only $1.7 million in deposits.
However, what is most troubling is the lack of communication from the Multichain team. It was reported that the current CEO of Multichain Zhaojun has been offline for a week. This left many investors and traders in the cryptocurrency market feeling uncertain about the future of the project.
Additionally, Multichain reported that some cross-chain routes are unavailable due to force majeure and that Kava, zkSync, and Polygon zkEVM routes have been temporarily suspended. There were also 83 deals pending for more than one day, raising more concerns among investors and traders.
Featured image from Unsplash, chart from TradingView.com