PANews, June 7: Yield protocol PiggyBank has issued a statement acknowledging a significant error in its basis trade involving LAB tokens last month. PiggyBank disclosed that the team previously purchased locked LAB tokens via OTC channels at a low price, amounting to approximately $100,000 (about 2% of the portfolio), while simultaneously shorting perpetual contracts as a hedge. However, during the holding period, LAB suffered severe market manipulation, resulting in liquidity depletion and deeply negative funding rates, which led to excessively high hedging costs. The team ultimately closed the short position to limit downside risk. At current prices, the total value of the locked LAB position is $1.35 million. However, due to insufficient liquidity in this position, PiggyBank will exclude it from net asset value calculations until its first unlock on August 14.
PiggyBank Admits LAB Token Basis Trade Error, USDC Treasury Drops 15%
PANewsShare
Summary
PiggyBank disclosed a flawed LAB token basis trade that affected its USDC treasury, resulting in a 15% decline. The team purchased $100,000 in locked LAB via OTC and hedged the position with short perpetual contracts. Market manipulation and liquidity constraints distorted the risk-reward profile, compelling the team to close the short position. The illiquid LAB position is now valued at $1.35 million and will be excluded from NAV until August 14. Key price levels for LAB remain under close observation as traders evaluate support and resistance levels.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.