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Prisma Finance, a rising decentralized borrowing protocol, made headlines as its total value locked (TVL) surged to $320 million, a staggering $240 million increase within a single day. The surge coincided with the launch of the governance token, PRISMA, marking a significant development for the platform.
Justin Sun's Alleged Role in the Surge
Monitoring data from XArkham revealed a massive $110 million wstETH deposit by an address linked to Justin Sun on Nov. 2.
In the past hour, a large address linked to Justin Sun has deposited $110M wstETH in the @PrismaFi pools, and has minted over $60M of the stablecoin mkUSD.
— Arkham (@ArkhamIntel) November 2, 2023
This address 0x9FC currently owns >60% of the wstETH deposited in Prisma. pic.twitter.com/3Xl1QRMICh
The deposited wstETH was utilized to mint over $60 million worth of mkUSD stablecoins. Currently, the address (0x9FC) holds a dominant share of over 60% of the wstETH in the Prisma Finance pool, suggesting significant involvement.
PRISMA Token's Rollercoaster Ride
Despite the unprecedented surge in TVL, the platform's native token, PRISMA, witnessed a drastic decline of over 78% in the last 24 hours. The sharp decline in PRISMA's value poses questions about the sustainability of the surge and the potential implications of Sun's involvement in the platform's dynamics.
Prisma Finance operates as a decentralized borrowing protocol enabling users to generate a stablecoin, mkUSD, collateralized by liquid staking tokens. Additionally, the protocol reportedly offers multiple layers of security, including a Stability Pool comprising mkUSD and a network of borrowers acting as collective guarantors, reinforcing the platform's stability.