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XCN Markets Post Mortem

XCN Markets Post Mortem

Chain has reviewed market data from the flash crash of XCN prior to the price stabilizing on cryptocurrency exchanges.

We have observed irregular market movements that had occurred at approximately 01:00 SGT, which after investigating was primarily started due to a market maker configuration error and API error. Due to this, the price of XCN began to drop in large percentiles, causing a cascading low volume sell pattern. As this took place, corresponding bids became stuck via API orders, thus creating downward pressure on the trading markets through margin liquidations with low liquidity causing other markets to react in parallel to arbitrage.

Due to the issues at hand and overall market conditions in the cryptocurrency markets, the price of XCN continued to trend downward to the point where over 500 million XCN in margins were called and liquidated. The flash crash enabled risk parameters on the exchanges and the market making, including the disabled deposit and withdraw functionality, in order to prevent the ability for users to quickly arbitrage the trade, and to ensure user safety from the possibility of a breach or hack, so that normality could be restored. Action was taken swiftly to protect users.

By approximately 03:00 SGT, the team had conferred with market participants as well as exchanges and was confident the issues at hand were not from a breach nor hack, but from a technical and margin liquidating issue.

Thereafter, we made a public statement that we were investigating the matter and had come to some initial conclusions, contrary to third party negative statements that were hastily made.

Shortly after, the market deposits and withdraws re-opened and exchanges enabled users to arbitrage trades along with the restoration of market making services. XCN immediately recovered the price point to a more appropriate, current market percentile drop.

At this point in time, the market has stabilized and trading is considered to be normal.

In order to support healthy markets, and in order to prevent technical errors or malicious actors from abusing XCN trading markets, Chain, or it’s agent/employee/partner, will provide, primarily, a market-only automated liquidity provision. With this deployment, Chain will be acting as a passive market maker, primarily on the maker-side and with primarily limit only orders. Chain may update this strategy temporarily, from time to time, by implementing a very limited set of market orders to assist any temporary market disruption(s) caused by others, or to restore bid and ask ranges equal to other trading venues, but will never use market orders to create deceptive or manipulative price movements. By deploying this automated liquidity provision, Chain can ensure its users, who purchase XCN to utilize on the Chain ecosystem products, fairness and proper liquidity in accordance with current market rates. Chain will never influence or trade against any market participant in a method designed to intentionally create profitability and will consistently attempt to achieve a market-neutral stance with its primary goal to ensure proper liquidity to protect the markets from any other disruptions as outlined in this blog. These services will not be made available in all digital asset exchanges and the final list of supported digital asset exchanges where Chain will deploy this service will be exclusively determined by Chain. Chain may modify or terminate this service without any prior notice(s).

Disclaimers:

As information continues to be gathered, the above synopsis is subject to change. Chain Token (“XCN”) was issued and distributed by Chain, a corporation located in Saint Kitts and Nevis, and is bound by the arbitration agreement located on Chain.com/legal. XCN tokens are not securities, investments or investment contracts, nor should they be construed as such. Rather, XCN tokens are a means of accessing discounts on Sequence, paying for invoices, accessing premium services and voting for community-based programs. Materials published by Chain do not constitute the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting, securities offering or any other related services, nor are they recommendation being provided to buy, sell or purchase any product or service. Further, materials published by Chain reflect the information available as of the time of publishing and are subject to change at any time without notice. DO NOT purchase XCN for any speculative purposes and only purchase units of XCN that you intend to utilize and consume on the Chain ecosystem. Chain will not be liable for any direct or consequential loss arising out of the use of this material or its contents.

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