OKX announces user compensation plan in wake of OKB price crash

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Crypto change OKX confronted important market turbulence this week as its native token, OKB, skilled an almost 50% drop in worth in a quick timeframe.

OKX has knowledgeable its 393,100 followers on X of a complete inner plan to resolve present points and has pledged to compensate its customers for any further losses ensuing from irregular liquidation.

“The platform will totally compensate customers for added losses brought on by irregular liquidation. The particular compensation plan shall be introduced inside 72 hours,” the change acknowledged.

As of the most recent replace, the OKB token is priced at $47.04, marking a 13.55% decline over the previous week. Nevertheless, on Jan. 23, the token noticed a steep fall from $52 to $25, nearly halving its worth and inflicting appreciable misery amongst traders.

OKX plans to implement enhanced measures to handle future market volatility, together with optimizing spot leverage gradient ranges, revising pledged lending danger management guidelines, and refining liquidation mechanisms. The aim is to forestall comparable market fluctuations from adversely impacting traders’ giant leverage positions.

Nevertheless, the crypto group on X has expressed skepticism concerning the state of affairs, specializing in the $10 billion market capitalization of OKB and considerations over how a $10 million sale may precipitate a 50% drop in its worth.

One consumer emphasized the pressing want for corrective motion to forestall additional decline, whereas one other speculated that the drop could possibly be attributed to a ‘whale‘ – a time period used for entities holding giant quantities of a crypto token – liquidating their holdings.

Leveraging in cryptocurrency, involving the usage of borrowed funds to amplify funding returns, is a double-edged sword, providing excessive rewards however equally excessive dangers. OKX at present gives leverage choices of 10x and 20x below full liquidation mode.

The market can also be influenced by flash crashes, usually triggered by the skinny liquidity unfold throughout varied platforms. For OKB, a market depth of two%, which gauges the capital wanted to shift an asset’s worth by 2%, lies between $224,000 and $184,000. This implies a promote order exceeding $224,000 may probably set off one other worth cascade.

OKB’s present market cap stands at $2.8 billion, rating it because the fourth-largest change token by circulation, as per CoinGecko.

The broader cryptocurrency market additionally skilled important fluctuations on the identical day, influenced partly by the Grayscale Bitcoin Trust (GBTC) selling Bitcoin to fulfill investor redemption calls for. Notably, FTX, a cryptocurrency change going through its personal challenges, offloaded practically $1 billion value of GBTC ETF shares as a part of its property liquidations.

In the meantime, OKX has not too long ago targeted on aligning with regulatory requirements. This consists of the delisting of several privacy coins resembling Monero, Zcash, Sprint, and Horizen on Dec. 29, 2023, and the introduction of further necessities for UK customers to comply with the Financial Conduct Authority (FCA) regulations, which got here into impact on Jan. 2.

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