Buy tx: 0xe6065696da52342ad498ac5c878a674fb46ba1fd56ac5f4f353fc8ef71cda0e2
Sell tx: 0x71e5111659c2f887820048de41b544fe7a0dd007da36a70985b48ad481fa49ce
How does losing 99.7% of your investment sound? What if it happens in just 90 minutes? Sounds crazy, but that’s exactly what happened to one DeFi whale, the hero of this cautionary tale.
Everybody makes mistakes and no one can truly predict what the price of an asset will be in a year or even a month from the date of a transaction. But people do expect to have some idea about the price action within 90 minutes of executing a trade. And when it comes to a project created by a DeFi demigod, Andre Cronje, the expectation is for the price to skyrocket if you get in early enough. Unfortunately, especially for that one wallet, this was not the case with EMN.
Whales are wallets with a large amount of money in them, usually the equivalent of hundreds of thousands (or even millions) of U.S. dollars. With that kind of purchasing and selling power, a single whale can significantly move the price of an asset, especially one with low liquidity. There is also an assumption (justified or not) that whales know more about the market in general and specific assets than the holders of smaller wallets. This is similar to stock traders/investors watching Warren Buffet’s every move.
Indeed, the whales do often use their huge stack of funds to move the markets and come out with a sizeable profit. But in this particular case, the whale got burned. Badly. It’s understandable why the whale wallet bought EMN. Cronje’s other projects keep mooning ( =quickly multiplying several times over in price) as soon as they hit the market, despite the creator’s repeated warnings that he releases product early for the community to play with and not for speculators to get rich off of. Cronje’s most famous project, YFI, is considered the Bitcoin of DeFi, partly because the price of a single YFI token reached an ATH (all-time high) of over $40k. So could EMN moon? Easily. Did it? Not quite.
When this whale bought EMN, it was trading for around $0.016 — with apparently plenty of room to grow.
Yet, its price completely collapsed and was fast approaching zero just 90 minutes later.
Why? Cronje later revealed that EMN had an exploit that a hacker found and drained $15 million from the token’s smart contract. Ouch. Exploits happen (just ask FARM, YFO, and countless others) because no amount of testing can account for every possibility of a hack, and many projects are released unaudited.
When the price suddenly plummets, you have two choices: sell ASAP to get some of your money back or HODL and hope that the price recovers (as happens after most flash crashes, for example). This whale decided on Option 1 and from the initial investment of $130,548 was able to recover… $368. At least that was enough to buy 1ETH at the time. But losing 99.71% of the investment in 90 minutes must have hurt. Apparently, the wallet held nearly $800k of PICKLE, which is a promising project whose price goes up and down, but at least not 99.71% down (so far). Should’ve stuck with that. But hey, hindsight is 20/20.
The moral of the story is that no wallet is safe from a trading loss and no project is safe from hacking. DeFi has its risks, but they are well-balanced by the rewards. Plus, there are always ways to mitigate your risks. When copying wallets on DeXe.Network, do your research, and follow the wallets with a good track record of trades. And once our full platform is released, you’ll be able to see the trading history and success rates of the best traders (and even buy their personal tokens). Until then, keep searching for interesting wallets to copy — in DeFi, it does pay to find out about cool projects early.