Tellor Accused Of TRB Market Manipulation After Violent Pump and Dump

The team behind Tellor, a protocol providing oracles for smart contracts, is facing market manipulation accusations after the price of its TRB token soared 172% in a day before the gains were wiped out within a single hour on Dec. 31.

Data from TradingView shows the price of Tellor Tributes (TRB) spiking from $231 to $630 over eight hours on Dec. 31. After a period of consolidation, TRB’s price evaporated from $611 to $195 over less than one hour. The token later tagged a low of $120 and last changed hands for $184.

On Dec. 29, Spot On Chain, an on-chain data provider, flagged that TRB had tagged an all-time high of $225, noting that a small group of whales held an outsized share of the token’s supply.

“Among the 2.5M TRB in circulation, about 1.7M is on exchanges, and 660K is held by a group of 20 whales,” Spot On Chain tweeted. “The group of whales accumulated these tokens in August and September at a favorable price of $15… Over the past two months, the whales have slowly deposited their tokens onto exchanges, creating a pump-and-dump cycle to liquidate their holdings.”

Lookonchain, an on-chain analytics firm, flagged that the Tellor team deposited $2.4M worth of TRB to Coinbase near the peak of the pump, implying that the team may have been complicit in the alleged pump and dump scheme. Around $68M worth of TRB liquidations were processed amid the volatility, according to Lookonchain.

Tellor is yet to make a public statement regarding the violent market action.

Synthetix incurs $2M in debt

Synthetix v2, the veteran DeFi project powering several decentralized derivatives protocols, incurred roughly $2M worth of debt as a consequence of the violent market action. The losses were suffered by Synthetix stakers.

“Yesterday’s TRB pump was abused for some traders to enter into outside positions that left the debt pool -$2M," tweeted Synthetix’s Adam Cochran. “In tail risk scenarios like yesterday the pool loses and socializes the losses.”

Omer Goldberg, the founder of Chaos Labs, an on-chain risk monitoring platform, tweeted that Synthetix had denominated the open interest (OI) limit for its TRB pool in the token itself, suggesting the incident could have been averted if the limit was set using a value in fiat currency.

“It looks like the team set the OI caps denominated in TRB tokens, not the notional USD value, fully exposing the market to the TRB pump,” Goldberg tweeted. “Across six hours… the cap ballooned ~50x, from USD 250K to 12.5M USD at the pump’s peak.”

Cochran agrees, advocating for the introduction of a “dual cap system” with limits set according to native token and USD pricing alongside “volatility circuit breakers.”

However, Cochran added that Synthetix v3 is currently under development meaning any engineering resources devoted to upgrading v2 will slow down the development of the new protocol.

“Until there is a live v3 with appropriate stop gaps… the right answer in the time being is to be stricter on the assets synthetic lists instead of rubber stamping things,” Cochran continued. “Last epoch, I was the only councilor to even once vote against an asset listing, or raise questions about their liquidity.

Cochran also noted that Synthetix had paid out $30M worth of fees to stakers after processing $41B worth of volume throughout 2023 prior to the incident.