In a shocking turn of events, Mantra ($OM), a once-promising crypto project built around real-world asset (RWA) tokenization, experienced a catastrophic crash of over 90% in mid-April 2025. Billions in market capitalization were wiped out in hours, sending shockwaves through the crypto community. But what exactly went wrong?
Background: What Is Mantra ($OM)?
Founded in 2020, Mantra started as a DeFi protocol with an ERC-20 token on Ethereum. Over the years, it evolved into a Layer-1 blockchain focused on tokenizing RWAs, gaining support from major institutional partners and regulators in Dubai. In late 2023, the project launched its own chain and introduced a one-for-one bridge mechanism to migrate ERC-20 tokens onto the new chain.
Mantra had ambitious plans:
- Regulatory approval from Dubai’s VARA
- Partnerships with Google Cloud and MAG Group
- Integration of compliance features like identity verification
The April 2025 Crash: What Happened?
On April 14, 2025, $OM crashed by over 89% in 24 hours, falling from ~$6.82 to below $0.70. Here’s a breakdown of what triggered the collapse:
1. Massive Forced Liquidations
According to co-founder JP Mullin, the crash was driven by aggressive liquidations of leveraged positions using OM as collateral on centralized exchanges.
“This was a low-liquidity environment on a Sunday night. Exchanges force-closed massive leveraged positions worth hundreds of millions,” said Mullin.
2. Mirrored Supply and Tokenomics Shift
In 2024, Mantra conducted a DAO vote to merge the ERC-20 OM tokens with its new mainnet token via a one-to-one burn-and-mint mechanism. This led to:
- Doubling of supply (from 8.88M to ~18M+ OM tokens)
- Confusion about total circulating tokens
- Binance even issued a warning to users about OM’s tokenomics shift in January 2025
3. Lack of Liquidity and Market Maker Inertia
Mantra worked with multiple market makers like Laser Digital, Amber, and Manifold Trading, but none could cushion the rapid sell-off.
“Their positions were not capable of handling this magnitude of forced selling,” admitted Mullin.
Was It a Rug Pull?
Many investors suspected foul play or an insider dump. However, Mullin publicly denied any insider selling:
- He revested his team’s tokens for six more years.
- Sheruoq and Laser, key investors, also denied selling.
- Most team/investor tokens were locked in Anchorage custody.
“This wasn’t a rug pull. We didn’t dump. These were external margin calls,” Mullin emphasized in an interview with Coinage.
Deeper Issues: Structural and Communication Failures
While not a rug pull, the crash revealed key fragilities:
- Overreliance on centralized exchanges with opaque liquidation practices
- Over-complicated token structure with bridged tokens across Ethereum, Base, and BSC
- Insufficient safeguards for rapid market sell-offs
- Transparency concerns, especially around off-chain OTC deals and market making dynamics
The Recovery Plan
To restore investor trust and stabilize the ecosystem, Mantra plans the following:
1. Buyback Program
Mantra will use funds from its treasury and institutional support to buy back OM tokens.
2. Token Burn
A portion of future unlocked tokens will be permanently burned to reduce supply.
3. Increased Transparency
The team promised:
- On-chain tracking of wallets and vesting
- Full public post-mortem
- Clarified off-chain OTC deal disclosures
Can Mantra Recover?
Despite the crash, Mantra remains operational and claims to be financially solvent. Some investors see this as a second chance, especially with new token holders joining after the dip.
However, analysts remain cautious, citing parallels to Terra LUNA’s collapse in 2022 and warning of potential “bull trap” rebounds.
Final Thoughts
The Mantra crash highlights a growing problem in the crypto world — complex tokenomics, poor liquidity management, and centralized exchange dependencies. While the team denies wrongdoing, the project’s structural fragilities played a major role in the meltdown.
Whether Mantra can bounce back will depend on:
- Genuine transparency
- Investor trust restoration
- Real utility and demand for OM on its Layer-1 blockchain
