Mark Cuban Has Not Changed His Stance on DeFi Following Iron Finance Protocol Collapse

The billionaire Mark Cuban, who suffered losses during the collapse of the IRON Finance DeFi protocol’s token, admitted that he lost investments due to his own fault. In an interview with The Block, the owner of the Dallas Mavericks basketball team said that he should have spent more time on analysis.

On June 17, the project team recommended that users withdraw funds from the pools, as the IRON Titanium Token (TITAN) devalued as a result of a “banking panic”.

The asset was part of the collateral for IRON stablecoin on the Polygon network. The emission mechanism provided that if the IRON price deviated from $1, the protocol would issue additional TITAN and pull liquidity to stabilise it.

This arrangement created an arbitrage opportunity. Users began selling the tokens actively, leading to their devaluation.

According to Cuban, the incident did not affect his view of decentralised finance, which he had previously described as “the next big engine of growth” for the United States.

“I am to blame for not doing my homework. … A few hours of work with a spreadsheet and I would have been better informed about the risks. I still could have taken the risk, but it would have been more obvious,” the billionaire said.

The Dallas Mavericks owner said he saw information about IRON Finance online and decided to back the project. He believed the upside he could gain justified the risks.

“I thought I would let TITAN develop, not be greedy and withdraw everything after a few days. But obviously that never happened,” he added.

Cuban emphasised that the IRON Finance incident shows how crucial users are to the development of a DeFi project. In his view, if the community had been more active or larger, someone would have warned about the risk of TITAN devaluation.

The billionaire believes that to prevent such situations, participants in the sector should create “an auditing community or a test-network AI simulator capable of modelling all possible scenarios”.

The developers of IRON Finance said the incident was fatal for the protocol — they announced the project’s closure.

Iron Finance Post-Mortem 17 June 2021https://t.co/w084l7kzMK

— IRON Finance (@IronFinance) June 17, 2021

“What we endured is the worst that could happen to the protocol. … We learned a lot from this incident and, although nothing can be fixed in the existing system, in the future we will continue on with new products,” the statement said.

The project team said it would hire auditors to conduct a “deep analysis of the protocol” to better understand the causes of the incident. They will later launch a new version of the IRON stablecoin and begin testing two new products — IronBank and IronSwap.

On June 21, the DeFi project Impossible Finance was attacked using flash loans. Assets worth $500,000 were withdrawn from its liquidity pools.

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