The Kujira Foundation made it to the headlines when it opened leveraged liquidity positions worth millions of dollars using operational funds on its own platform. This was done to boost liquidity and enhance activity on the platform.
However, the positions were recently wiped out. Specifically, the loans taken by Kujira using its in-house KUJI token reserves became undercollateralized owing to the price volatility. This triggered auto-liquidations, which eventually transpired into a mass sell-off, and a further slash in the price of the asset.
KUJI has shed more than 50% of its value over the past 24 hours. At press time, it was seen exchanging hands around $0.2876, down by 50.16%. Data from Pulsar Finance pointed out that Kujira’s operations wallet had a debt of $1,855,196.
According to the team, people “targeted” its positions, and it has been a “constant fight since these positions were created.”
Panic has been spreading like wildfire, with some attributing it to be a rug pull. The team, however, said that there was no merit to these claims and merely “adds fuel to the fire.”
They further clarified that the team positions “are requiring more bids in order to fire off even partial liquidations." This means, even though there is potential for some bad debt, it hasn’t actually transpired yet. According to a recent post on X,
“There are still 14 million KUJI safe and sound in the treasury. Some people are trying to cause panic by saying the entire treasury is at risk, but that’s not the case at all.”
The team will officially shoot a proposal to create the Kujira Operational DAO to take ownership of the Kujira Treasury and core protocols. The initial mandate would be to “safely” reduce debt.
The team intends to do this by offering the community discounted KUJI, with a range of maturities and vesting schedules to minimize long-term price impact.
Chalking out another proposal that would prove to be constructive over the long-term, the team concluded,
“We propose that the Community Pool is migrated to the Operational DAO. This will allow a longer and more considered voting period for grant requests, as opposed to the regular 48 hours. Over time, the foundation’s staking positions will also be transferred to the DAO, providing a sustainable source of revenue into the future.”
