The total value locked (TVL) in Mantra’s decentralized finance (DeFi) protocol has skyrocketed by over 500% in just two days, following a significant price drop in the MANTRA (OM) token. This surge in TVL comes after OM’s price fell by 93%, a decline attributed to “reckless forced liquidations” carried out by centralized exchanges.
According to data from DeFillama, the TVL for Mantra’s RWA-focused blockchain protocol reached approximately 4.21 million OM tokens (worth about $3.24 million) during this sudden spike. The increase in TVL indicates a surge in investor interest as market participants rushed to buy OM tokens at a discounted price and stake them on the protocol to earn rewards.
A Spike Amid Chaos
Despite the market chaos that caused OM’s price to bottom out over the weekend, sharp buying activity followed the crash. Analysts noted that investors saw the price dip as a unique opportunity to enter the ecosystem at a favorable price. Crypto analyst “Dom” highlighted that over $35 million worth of OM tokens were purchased as the price bottomed out, pointing to a tactical accumulation strategy likely driven by whales or opportunistic traders.
TVL Growth Driven by Mantra Swap
The dramatic rise in TVL is reflective of increased engagement with the Mantra ecosystem, such as staking, yield farming, and liquidity provision. Notably, nearly 97% of the increase in TVL came from Mantra Swap, the protocol’s native decentralized exchange. In just two days, its automated market-making pools locked in 4.11 million OM tokens, making it the primary driver behind the TVL surge.
Concerns and Valuation Issues
Despite the promising rebound in both TVL and OM’s price—up around 170% to $0.99—concerns about Mantra’s valuation persist. Analysts point out that the protocol’s fully diluted valuation (FDV) stands at $1.88 billion, significantly outpacing its actual TVL. This disparity suggests poor capital efficiency, with only 0.17% of the FDV being actively deployed within the ecosystem, raising red flags regarding the protocol’s potential overvaluation.
As investors flock to the ecosystem for staking opportunities, the long-term sustainability of the protocol and its valuation will remain under close scrutiny.
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