Following the sharp price drop in the EDGE token traded on cryptocurrency exchanges, the EdgeX team has released a comprehensive report on the incident.
The project team stated that it played no role in the sell-off, but announced that affected users would be compensated as a gesture of goodwill.
According to a report shared by EdgeX, the sudden price drop in the EDGE token occurred as a result of attackers targeting a timeframe with low trading volume and exploiting approximately $1.25 million of limited on-chain liquidity on PancakeSwap. This reportedly triggered highly leveraged positions in futures markets and created a chain reaction that spread to centralized exchanges.
The report states that at 05:12 on the day of the incident, approximately 159,000 EDGE tokens were sold by 174 addresses in just one minute, representing a sales volume roughly 10 times higher than in previous minutes. This selling pressure resulted in the liquidation of 68.2% of long positions in the futures markets, followed by panic selling spreading to the spot markets. Trading volume on centralized exchanges reportedly increased to approximately $70 million within two hours, reaching 7 to 10 times the normal daily level.
EdgeX claims that there were no changes to the token balances of the project team throughout the process, and that this can be verified on the blockchain. The company also stated that preliminary reviews conducted by several centralized exchanges support these findings.
EdgeX, which also announced measures to be taken following the incident, announced that it has launched an on-chain reward program with a 200,000 USDC bounty for information that helps identify the attackers. In addition, it was announced that they will work with more market makers to increase both on-chain and off-chain liquidity.
Developers Will Only Compensate Users Who Suffer Damages on the EdgeX Platform
The company also announced it will compensate users who suffered losses due to the forced liquidation of EDGE long positions or the triggering of stop-loss orders in EdgeX V1 and V2 perpetual futures contracts between 04:50 and 06:00 on June 2nd.
The maximum compensation amount per user was set at 100,000 USDC, with 50% of the compensation to be distributed in USDC within 7 days of the verification process, and the remaining 50% in EDGE tokens calculated based on the 7-day time-weighted average price (TWAP), to be unlocked in the first week of April 2027. However, no compensation announcement was made for users who suffered losses due to the token price drop on centralized cryptocurrency exchanges.
*This is not investment advice.
