Cross-chain bridge Synapse has seen the value of its native token SYN plummet after a liquidity provider (LP) dumped all their tokens. According to data from CoinGecko, the token’s price declined by nearly 25% a few hours after the sell-off.
On Tuesday, 5th of August, Synapse Labs announced – via a post on X (formerly Twitter) – that one of the liquidity providers sold their SYN tokens and removed liquidity from the Synapse protocol.
Lookonchain reported a whale dumping 9 million SYN tokens an hour after this disclosure. According to the on-chain analytics platform, the whale sold the tokens for roughly 2.35 million USDC in two separate transactions at $0.26.
Additionally, Lookonchain revealed that the whale received these offloaded funds from the “Synapse: Executor 2” wallet, establishing a link with Synapse Labs’ recent announcement.
Meanwhile, Colin Wu’s report corroborated this on-chain discovery while adding that $37.537 million in stablecoin liquidity was removed from the Synapse protocol.
Various reports have emerged in the last few hours, speculating on the identity of the liquidity provider responsible for the 9 million token sell-off and liquidity removal. Crypto researcher Wazz claims that Nima Capital is the LP behind these actions and has broken its liquidity-provisioning agreement eight months early.
Their site went offline and twitter protected too https://t.co/ShlYcZhFbz pic.twitter.com/1ncxP13XYV
— Wazz (@WazzCrypto) September 4, 2023
In March, Nima Capital, a crypto venture capital firm, was designated Synapse’s first liquidity provider. According to the proposal, the firm committed to providing $40 million in actively managed stablecoin liquidity over twelve months while receiving 33% of bridge and swap fees.
Nima Capital appears to have limited its digital presence. As of this writing, the company’s website is offline and inaccessible to the public. Meanwhile, access to the firm’s X account has been restricted and is only available to confirmed followers.
It is worth noting that Synapse Labs didn’t reveal the identity of the liquidity provider in its announcement, and the team has yet to provide any further updates on the situation.
The liquidity removal and token sell-off have also impacted Synapse’s total value locked (TVL). According to DefiLlama data, the cross-chain protocol’s TVL has dipped by nearly 20% in the past day.
As noted earlier, the value of SYN suffered an almost 25% decline after the liquidity provider dumped its holdings. The token’s price crashed from $0.401 to $0.309 in hours.
SYN has since been showing glimpses of recovery, as it now trades above $0.35. According to CoinGecko data, the token is valued at 0.356092, with a 0.5% price increase in the past hour.
A broader look at its price performance shows that the SYN token has struggled in the last few months. After notching a yearly high of $1.59 in late February, the cryptocurrency has reversed all its gains, trading 77% beneath the 2023 peak.
SYNUSDT trading at $0.3575 | Source: daily SYNUSDT chart on TradingView
Featured image from FreePik, chart from TradingView