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.
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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.
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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.