Synapse Token Price Plummets Following Liquidity Removal
If you’ve been keeping an eye on Synapse, you may have noticed a significant drop in the price of its native token. Over the past few hours, SYN prices have plummeted by more than 20%. This sudden decline can be attributed to a large removal of liquidity from the protocol, as Synapse Labs informed its users on September 5.
Nima Capital’s Role in the Liquidity Dump
According to the protocol team, a liquidity provider associated with Synapse sold their SYN tokens, causing a crash in prices. However, it’s important to note that there was no security breach of the protocol or bridge. The team is currently investigating the unusual activity and trying to contact the liquidity provider for more information.
A Twitter user named “Spreek” reported that someone dumped 9 million SYN tokens in two transactions, worth around $3.7 million at the time. Another researcher, “Wazz,” revealed that it was Nima Capital, a crypto venture capital firm, behind the dump. This incident highlights how even venture capital firms are not immune to such actions.
Nima Capital’s Actions and Impact on Synapse
Nima Capital was Synapse’s first liquidity partner, providing $40 million in actively managed stablecoin liquidity for a 12-month term. However, it seems that the firm has decided to pull out with eight months remaining on the agreement. At the time of writing, Nima Capital’s website was offline, and its Twitter feed was set to “protected.”
Despite this setback, it’s worth noting that Nima Capital has made 31 investments in DeFi and crypto, including Teahouse Finance, Flow, Fordefi, Eversify Labs, OneOf, and Morpho Labs. However, further details regarding their decision to remove liquidity from Synapse remain limited.
Synapse Token Price and Market Performance
As a consequence of the liquidity removal, Synapse’s Total Value Locked (TVL) has dropped by 20% and currently stands at $113 million according to DeFiLlama. Additionally, SYN token prices experienced a 24% decline, falling from $0.410 to $0.309 during early Asian trading on Tuesday. As of now, the price has slightly recovered to $0.339.
It’s important to note that SYN token has already suffered significant losses due to the ongoing bear market. Over the past month, it has dropped by 40% and is down 93% from its all-time high of $4.92 in October 2021.
Hot Take: Synapse Faces Challenges Amidst Liquidity Dump
The recent liquidity removal by Nima Capital has dealt a blow to Synapse’s token price and market performance. This incident highlights the potential risks associated with relying on external liquidity providers. As Synapse continues to investigate and navigate this situation, it remains to be seen how the protocol will recover and regain investor confidence. It serves as a reminder of the volatility and challenges faced by projects in the decentralized finance space.
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