The recent collapse of the OM token, developed by the decentralized finance (DeFi) platform Mantra, has turned the spotlight on a crucial issue for the entire cryptocurrency ecosystem: the financial leverage policies adopted by the exchanges.
In an update published on April 30, Mantra emphasized how the incident was not an isolated event, but rather a symptom of a systemic issue that could affect any project in the sector.
The CEO of Mantra, John Mullin, stated that cascading liquidations pose a real threat to market stability, especially when fueled by excessively aggressive leverage positions.
According to Mullin, it is time for the sector to come together to review current policies and protect investors from avoidable risks.
The causes of the collapse of Mantra’s OM token: not just internal responsibility
Mantra clarified that the collapse of the OM token was caused by dynamics that go beyond the single platform. In particular, it pointed the finger at the high-leverage trading practices adopted by many centralized exchanges.
These policies, according to the company, amplify volatility and can trigger chain reactions that overwhelm even the most solid projects.
In its statement, Mantra made an appeal to the entire crypto sector to collaborate in defining more responsible risk management policies:
“We are collaborating with the main exchanges to improve market stability and we ask the rest of our sector to provide input on how exchange policies can minimize, or continue to allow, the policies that create risks for investors.”
In response to the collapse, Mantra announced a series of initiatives aimed at strengthening its infrastructure and improving user trust.
Mantra has indeed decided to accelerate the process of decentralizing its network. By the end of the second quarter of 2025, the company plans to halve the number of internal validators and integrate 50 external partner validators.
This move aims to reduce the concentration of validation power and to make the network more resilient to potential attacks or malfunctions.
Another concrete action was the burning of 150 million OM tokens previously in staking. This operation permanently reduced the total supply of the token, helping to stabilize its value and strengthen investor confidence.
To improve transparency, Mantra has introduced a real-time dashboard that provides updated data on the project’s tokenomics. Additionally, it has initiated the alpha test of a new Ethereum Virtual Machine compatible testnet, called Omstead.
This new infrastructure aims to improve the technical resilience of the network and to offer a more stable environment for the development of decentralized applications.
The silence of the exchanges: a collaboration that is slow to arrive
Despite the price collapse, the Mantra chain has continued to operate without interruptions, even recording transaction volumes at all-time highs. An important signal of the project’s technical solidity, even in extreme market conditions.
Despite the public appeals from Mantra, the response from cryptocurrency exchanges has so far been disappointing.
In particular, OKX, one of the main players in the sector, has refused to comment on the situation or to discuss a possible political collaboration to address the risks associated with leverage.
Yet, the CEO of OKX, Star Xu, was among the first to recognize the seriousness of the incident, calling the collapse of OM a “great scandal for the entire crypto sector”. An admission that, however, has not yet been followed by concrete actions.
The OM case represents a wake-up call for the entire cryptocurrency ecosystem. On one hand, it has highlighted the vulnerabilities related to excessive speculative practices, while on the other, it has offered Mantra the opportunity to demonstrate its ability to react and adapt.
With targeted interventions on governance, transparency, and technical infrastructure, Mantra is trying to transform a crisis into a growth opportunity.
However, without a collective commitment from the exchanges and other actors in the sector, the risk of new systemic bull remains high.
The future of the crypto sector will depend on the ability to learn from episodes like this and to build a safer, more transparent, and sustainable environment for all investors.
