PiggyBank admits a LAB token basis trade mistake, causing the USDC vault NAV to drop about 15% today.
The yield protocol PiggyBank posted that last month it bought locked LAB tokens at a low price via an OTC deal of about $100,000 and hedged the position short, but LAB subsequently suffered market manipulation, liquidity depletion, and deeply negative funding rates, forcing the team to close the short to limit losses.
The current locked LAB position is valued at $1.35 million, and due to insufficient liquidity it will be excluded from NAV until the first unlock on August 14. Today the USDC vault NAV fell about 15%, SPYx about -12%, JitoSOL about -9%. The team says a detailed report and next steps will be released next week.
Previously, on-chain investigator ZachXBT publicly questioned that PiggyBank controls over 95% of LAB supply.
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4.2K @piggybank_fi Dear Community,
- One month ago, PiggyBank got into a new position for $100k (~2% of the portfolio at the time), as part of the strategy’s scope of deploying into mid-cap basis trades.
- The strategy involved purchasing locked $LAB tokens at a significant discount through a Tier-1 OTC desk and hedging that exposure through perpetual shorts. During the holding period, $LAB experienced violent manipulation, including chaotic price movements on thin liquidity, and deeply negative funding rates.
- Maintaining the hedge became economically irrational and would have caused us to cross our risk thresholds. We therefore decided to close our short to cap the downside.
- In accounting terms, the total value of our $LAB locked position is $1.35m at current prices. However, due to the illiquid nature of this position, Piggybank is excluding it from the NAV until the first unlock on August 14. Even though this is an evolving situation that could still generate substantial returns, this is the fairest and most transpar
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177.5K @wublockchain12 Wu reports that the yield protocol PiggyBank posted stating that a month ago it established LAB-related positions with $100,000, employing a strategy of discounted buying of locked LAB and hedging with short perpetual contracts. PiggyBank says that because LAB exhibited extreme volatility in a low‑liquidity environment and the funding rate depth was negative, maintaining the hedge is no longer economically justified, so the short has been closed. At current prices, the locked LAB position is valued at about $1.35 million, but due to insufficient liquidity it will not be counted in NAV until the first unlock on August 14. As a result, today the USDC vault NAV will decline by roughly 15%, SPYx by about 12%, and JitoSOL by around 9%. PiggyBank says a detailed report will be released next week.
On‑chain sleuth ZachXBT subsequently criticized the use of user assets for high‑risk token trading and, back in May, had questioned LAB’s opaque private‑loan/OTC arrangements, vesting‑period adjustments, market‑making coordination, and highly concentrated supply.
https://t.co/MSTMBuiaSb
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45.9K @Usoppu Crypto is a very serious industry
Piggybank used user funds to buy $100k of discounted, locked $LAB tokens and opened a short position to protect against price drops.
Price manipulation made holding the short too expensive. They closed it (or liquidated?) leaving the investment completely unprotected.
Though the locked tokens hit $1.35M on paper, they can't sell until August 14.
This unprotected risk caused major vault drawdown losses - ~15% in USDC, ~12% in SPYx, and ~9% in JitoSOL.
4.2K @piggybank_fi Dear Community,
- One month ago, PiggyBank got into a new position for $100k (~2% of the portfolio at the time), as part of the strategy’s scope of deploying into mid-cap basis trades.
- The strategy involved purchasing locked $LAB tokens at a significant discount through a Tier-1 OTC desk and hedging that exposure through perpetual shorts. During the holding period, $LAB experienced violent manipulation, including chaotic price movements on thin liquidity, and deeply negative funding rates.
- Maintaining the hedge became economically irrational and would have caused us to cross our risk thresholds. We therefore decided to close our short to cap the downside.
- In accounting terms, the total value of our $LAB locked position is $1.35m at current prices. However, due to the illiquid nature of this position, Piggybank is excluding it from the NAV until the first unlock on August 14. Even though this is an evolving situation that could still generate substantial returns, this is the fairest and most transpar
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