ME News reports that on June 7 (UTC+8), the DeFi yield protocol PiggyBank tweeted that approximately one month ago, it invested $100,000 in LAB via an over-the-counter trade at a low price, accounting for 2% of its portfolio at the time. After investing in LAB, the protocol established a short position using a delta-neutral strategy; however, due to extreme price manipulation and liquidity issues, funding rates remained persistently negative, resulting in continuous losses on the short position. PiggyBank stated that it has prepared to close the short position to limit further losses. The currently locked LAB position is valued at approximately $1.35 million, but due to insufficient liquidity, the protocol plans to exclude this value from its net asset value, which may cause users to see short-term net asset value declines across various Vaults. PiggyBank will release a detailed report next week outlining subsequent resolution measures. (Source: Foresight News)
DeFi Yield Protocol PiggyBank Suffers Major Loss from LAB Investment
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Summary
On June 7, the DeFi yield protocol PiggyBank disclosed a significant loss from a $100,000 cryptocurrency investment strategy involving LAB via an OTC trade, accounting for 2% of its portfolio. The protocol employed a delta-neutral strategy to short the position but encountered extreme price volatility and liquidity constraints, resulting in sustained negative funding rates. PiggyBank is now liquidating the short position to limit further losses. The locked value of the LAB position is approximately $1.35 million; however, due to poor liquidity, it will be excluded from the net asset value calculation, potentially impacting the short-term risk-to-reward ratio of the Vaults. A full report is expected next week.
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