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Fantom (FTM), a high-speed scalable blockchain network, is facing a precarious situation due to its significant exposure to Multichain, its official cross-chain bridge. A substantial portion of the total value locked (TVL) on the Multichain network comes from Fantom, raising concerns regarding the potential impact of recent developments.
Per current data, the Multichain network has a TVL of approximately $1.76 billion, of which Fantom constitutes the greatest proportion at 36.7%. The assets on Fantom are about $1.66 billion, with nearly 40% of these assets being wrapped assets of Multichain.
The main stablecoin on Fantom is USDC, with 191 million USDC and 82 million USDT assets predominantly issued by Multichain. This points to Fantom's large exposure to Multichain and any potential issues that might arise on the latter's platform.
1/ Rumors are spreading that the Multichain team has been arrested.
— Ignas | DeFi Research (@DefiIgnas) May 25, 2023
The FUD resulted in a 5x increase in daily bridging volume.
What does other on-chain data reveal? pic.twitter.com/kqmuAOUxtp
This scenario has become particularly alarming in light of the recent news surrounding Multichain. Although details are limited at the time of writing, there are reports suggesting potential legal issues involving the Multichain team. Any disruption to Multichain's operations could have severe repercussions for Fantom, given their intertwined financial relationship.
Despite the uncertainty, most chains within Multichain are operating normally for now, and there are no signs of a depeg of USDC and USDT on Fantom. Nevertheless, these rumors have already affected Fantom's market performance. The network saw an 8% price drop following the news of potential issues at Multichain.
The Fantom network finds itself in a difficult position. With such a high percentage of its assets tied to Multichain, any adverse developments could lead to serious consequences for the network. While it is too early to predict the outcomes, the situation warrants close monitoring by investors and stakeholders in the coming days.
Tomiwabold Olajide
Vladislav Sopov
Dan Burgin