Wonderland’s TIME token slid to a record low on Wednesday, falling as much as 40% in 24 hours to just under $420 in Asian hours.
TIME has lost 95% of its value from its November peak of $10,000, becoming one of the worst-performing cryptocurrencies in the past few months during a broader decline that saw bitcoin, ether and other major cryptocurrencies reach prices last seen in mid-2021.
Theories in crypto circles behind the sell-off included Wonderland developers selling part of their holdings and the unwinding of positions of overleveraged traders.
Liquidations occur when a trader has insufficient funds to keep a leveraged trade open. While these mainly happen on futures products, investors lending their cryptocurrencies on decentralized finance (DeFi) applications – in return for yields – are subject to liquidations when protocols automatically sell holdings if prices of staked assets drop below a threshold. This, in turn, causes prices to fall further, creating a ‘liquidation cascade.’
Wonderland’s TIME tokens are backed by a basket of assets issued over the Avalanche blockchain, giving the tokens an intrinsic value. TIME is what the platform calls “money” – a wholly decentralized means of value backed by liquidity provided by the platform’s users.
Wednesday’s plunge saw developers conduct a $5 million buyback during the Asian morning. “Looks like the bots and limit orders ran out of funds. I’m replenishing now and just did a $5mm buyback,” Wonderland developer Sifu wrote in a post on the project’s Discord channel.
The previous buyback occurred earlier this month, when TIME prices fell to under $830 from $1,400. Several millions of dollars worth of the tokens were bought by Wonderland developers to bring prices above their intrinsic value at the time, as reported.
Meanwhile, some blockchain sleuths pointed out that Wonderland’s chief developers took on millions of dollars in losses after the sell-off. Sifu’s wallet saw $1.6 million of losses due to liquidations, while those on Daniele Sestagalli’s wallet reached $15 million.
Quick correction. The initial link posted directs to Sifu's wallet (Wonderland cofounder) which has been liquidated for $1.6M so far today. This link is the link to Dani's wallet which has been liquidated for $15M so far.https://t.co/7SnKGevKlr
— FreddieRaynolds (@FreddieRaynolds) January 25, 2022
TIME price recovered in European morning hours, and was trading above $610 at the time of writing.