Price history: The OM token launched in 2020 as part of Mantra DAO, initially trading around a few cents. It saw a modest rally to about $0.85 in March 2021 amid DeFi hype, but then drifted downward during the 2022 bear market. In late 2023, things turned around dramatically. By January 2024, OM was trading around 1–2 cents, but over the next 12+ months it exploded upwards by over 30,000%, reaching a peak of $8.99 on Feb 22, 2025. Early 2025 saw OM among the best-performing cryptocurrencies, fueled by excitement around MANTRA’s new blockchain and real-world asset (RWA) partnerships (like a $1B tokenization deal with Dubai’s DAMAC group.
The April 2025 crash: On April 13, 2025, OM’s bull run came to a screeching halt. Within hours, OM plunged from about $6.30 to $0.37, a drop of over 90%. Most of those gains from the past year evaporated in a single day. At the time of writing, OM has recovered slightly to trade around $0.50–$0.60 (still 93% below its all-time high). This collapse has been called “the most significant project collapse since the LUNA crisis” by some traders , and billions in market cap were wiped out almost instantly. So, what on earth happened to cause such a rapid crash? Let’s break down the causes.
Before understanding the crash, it helps to know what OM Mantra is and why it shot up in value. Mantra (formerly Mantra DAO) is a crypto project that started in 2020 focused on decentralized finance (DeFi). It initially launched on Ethereum (with an ERC-20 token OM) and gained attention as one of the first Polkadot ecosystem DeFi platforms. The platform offered staking, lending, and a launchpad service, and OM was used for governance and staking rewards.
MANTRA’s evolution: In 2024, the team pivoted Mantra into its own Layer-1 Mantra Chain, targeting real-world asset tokenization (bringing real assets like real estate or stocks onto blockchain). Mantra Chain is built on the Cosmos SDK and is designed to be regulation-friendly, with high throughput (~10,000 TPS) and interoperability via Cosmos/IBC. This positioned MANTRA as a “security-first RWA blockchain” aimed at institutional use cases. The project scored big partnerships – for example, a deal to tokenize $1 billion of real estate assets on Mantra, and it obtained a crypto license in Dubai. These developments created huge buzz around OM in late 2024 and early 2025, as investors speculated that Mantra could become a major platform for real-world assets.
OM token utility: The OM token is the lifeblood of the Mantra ecosystem. With the launch of Mantra’s own chain (Mainnet went live in October 2024, OM transitioned from an ERC-20 into the native coin of the new blockchain. Its roles include: staking (users stake OM to validators to secure the network and earn yield), governance (voting on proposals), and paying transaction fees on Mantra Chain. In other words, OM is supposed to have fundamental utility in the Mantra ecosystem – similar to how ETH fuels Ethereum.
However, as we’ll see, changes to OM’s tokenomics during this migration sowed the seeds of the crash. The hype around Mantra’s potential drove OM’s price way up, but the token’s economics and distribution couldn’t support those prices long-term.
When OM’s price started free-falling on April 13, many traders feared the worst – was it a rug pull or hack? The price collapsed so fast (over 90% drop in under 4 hours that even seasoned traders were stunned. Here’s how the situation unfolded:
Traders on X (Twitter) and Reddit compared the incident to other infamous crypto collapses – one user asked if this was “the biggest rug pull since LUNA/FTX?." Others dubbed it “Terra-Luna V2” in reference to the Terra Luna meltdown. While those comparisons may be exaggerated, the OM crash was undeniably one of the largest single-day destructions of value in crypto history.
So why did OM crash so hard? Let’s dig into the real causes beyond just panic – namely OM’s tokenomics and some alleged actions by major token holders.
There wasn’t a single simple cause – multiple factors converged to break investor trust and crash the price. Here are the key reasons:
🌊 Massive supply dilution: In order to launch Mantra’s new blockchain, the team doubled the total supply of OM tokens from 888 million to 1.78 billion. This was done by minting another 888 million OM on the new chain. Suddenly, existing OM holders found their share of the project diluted by 50%. Such a huge increase in supply put immediate downward pressure on OM’s price – essentially, the value of each token gets diluted when you create so many new tokens. This dilution was likely the single biggest fundamental reason for the crash.
📈 Shift to an inflationary model: Along with doubling the supply, Mantra changed OM’s economics from a fixed-cap token to an uncapped inflationary token. This means new OM can continually be minted as staking rewards and incentives. While moderate inflation can secure the network, it introduced uncertainty for investors – people weren’t sure how high the inflation could go, and whether holding OM long-term made sense if supply would keep growing. The sudden move to an inflationary model eroded confidence and led some to sell.
🔓 Token unlocks and airdrops: The Mantra team allocated large portions of the newly minted tokens to various purposes. Notably, they scheduled airdrops and unlocks that began hitting the market in 2025. For example, 50 million OM were airdropped in March 2025 to promote Mantra, and an additional 7.07 million OM unlock was looming on April 18, 2025. These events meant a lot of OM flowing into circulation. Holders anticipated that recipients of those airdropped tokens (or early investors getting unlocked tokens) would dump them for profit, driving the price down. This expectation of increased selling pressure contributed to the crash as people rushed to sell before others could.
🐋 Whales (and team?) dumping: Perhaps the most controversial cause: a single entity unloaded a huge amount of OM during that fateful day. Many in the community alleged that it was the project team itself dumping their reserves. Social media claims said the team “dumped 90% of the total circulating supply” – effectively selling an enormous stash of tokens OTC and on exchanges. This accusation (if true) would mean the crash was a quasi-rug pull by insiders. Mantra’s team officially denied this, blaming “reckless liquidations” by large holders unrelated to the. It’s possible an early investor or whale (not necessarily core team) who held a huge allocation decided to cash out everything, knowing the tokenomics had changed. In any case, a whale dumping tens or hundreds of millions of OM at once triggered the collapse. Whale sell-offs can tank any token’s price, especially one that had low liquidity at high prices.
😨 Panic selling and liquidations: Once the price started free-falling, panic spread among other OM holders. Many rushed to sell at market prices (driving the price down further) or hit stop-loss orders. Those who bought OM on margin faced liquidations as the value dropped, forcing automatic sell-offs. The cascading effect of these liquidations and panic sells drove the price into a deeper death spiral. Mantra’s team pointed to these “reckless liquidations” as the culprit rather than deliberate du. Essentially, the crash became self-fulfilling: as the price crashed, it triggered more sells, which crashed it further.
💬 Communication and trust breakdown: A softer factor was the loss of trust. During the critical hours, the project’s silence (closing Telegram to new messages) and lack of a rapid public response led many to assume the worst. Rumors of a rug pull gained tr . This psychological factor meant no buyers were willing to step in and “catch the falling knife.” Without buy support, the price had no floor until it had wiped out almost all prior gains.
Understanding OM’s tokenomics is key to understanding its rise and fall. Tokenomics refers to the economics of the token – how supply is created or destroyed, and what the token is used for.
Supply explosion: Originally, OM had a maximum supply of 888,888,888 tokens (nearly 889 million). By early 2024, about 93% of that was already circulating – meaning the project had few tokens left to fund new initiatives. When launching the new Mantra Chain, the team decided to mint an equal 888,888,888 new OM on the new chain. This effectively doubled the total supply to 1.78 billion.
The reasoning was that the project needed more tokens to fund development, attract developers, and reward network validation. In their view, 93% of tokens being in circulation left no room to grow. By increasing supply (and moving to an uncapped supply model), they could pay staking rewards and incentivize growth of the ecosystem. Indeed, some of the new tokens were allocated to an “ecosystem fund” of $108 million for developers and partnerships.
However, this came at a huge cost to existing investors. Overnight, any given OM holder’s percentage of the total supply was cut roughly in half. If you owned 1% of OM before, you owned ~0.5% after (unless you received equivalent new tokens, which most did not except small airdrops). Such dilution tends to crush a token’s price unless there is equally huge new demand to absorb the new tokens.
Inflation and staking: Beyond the one-time doubling, OM’s supply became inflationary. The project introduced ongoing inflation (reports suggest around 3% annually to start, though adjustable) to reward stakers securing the network. OM holders can stake (lock up) their tokens with validators and earn new OM as a reward – about 5.4% APY at the time. This is a normal mechanism for Proof-of-Stake blockchains. But it means the supply of OM will keep increasing every year. If the network doesn’t grow its user base accordingly, this inflation simply puts downward pressure on price (existing tokens slowly lose value as more tokens enter the market).
To be clear, OM’s inflation rate (~5% staking yield) is much more modest than something like Olympus OHM’s (which was hundreds or thousands of percent at one point). So inflation alone wasn’t extreme. The bigger issue was the sudden doubling and distribution of a huge amount of tokens to insiders and strategic uses. Many of those holders apparently did not remain “long-term aligned” – they sold at the first opportunity.
Ecosystem utility: On paper, OM has solid utility – you need it to use the Mantra Chain. OM is used to pay transaction fees on Mantra Chain, similar to gas on Ethereum. It’s also required to stake and participate in governance decisions. These uses can create organic demand for OM if the Mantra ecosystem thrives (i.e. lots of users and projects transacting on the chain). The problem is that this fundamental demand is still nascent – MantraChain is brand new, with few live applications beyond some pilot projects. The actual usage of OM for fees or DeFi on MantraChain is tiny right now. Thus, the fundamental value of OM (based on utility) is arguably low, while its price had been driven sky-high by speculative hype.
It’s worth emphasizing why inflation and dilution are toxic for a token’s price if not managed carefully:
On the flip side, inflation can be sustainable if it’s low and paired with growth. The OM team argued that an uncapped supply with controlled inflation is necessary to secure the network long-term and attract dApp builders. They may be right from a technical standpoint. But from an investor standpoint, the sudden policy change was a red flag. Confidence is key in crypto – and inflation fears eroded confidence in OM.
OM’s rise-and-crash is dramatic, but it’s not the first nor last crypto token to boom and bust. Let’s compare it with a few others to put things in perspective and draw lessons:
Big Picture: Many crypto tokens have risen dramatically on hype and then fallen 90–99% when reality kicks in. OM is unfortunately now in that category. The root causes vary – from inflation (OHM) to oversupply (GODS) to structural failure (LUNA) – but a key lesson is that fundamentals eventually matter. If a token’s price far outruns its actual utility or if its economics favor insiders at the expense of holders, the market will correct it sooner or later.
The OM crash drew strong reactions from the community and industry watchers:
Rug pull accusations
Many users were livid and called the crash a scam. On social media, some labeled it “one of the biggest scams in crypto” and even said the team “belongs in prison.ere was a sense of betrayal among holders who believed the Mantra team might have dumped tokens secretly.
Calls for team clarity
Influential crypto traders on X demanded an explanation. One trader, Altcoin Gordon, wrote “the team needs to address this or OM looks like it could head to zero, biggest rug pull since LUNA/FTX." This public pressure likely pushed the team to respond quicker.
Official response – Denial
The Mantra team denied doing any rug pull. A community lead (Dustin McDaniel) posted in Telegram that the core team was aware of issues and preparing an official response. Shortly after, Mantra’s official account stated that the sell-off was “not triggered internally” and blamed large external holders and “reckless liquidations” for the plunge. They pledged to share more details and presumably take action to stabilize the project.
Market analysts
Some analysts pointed out the warning signs that were already there. OM’s rise from $0.015 to $9 was meteoric and likely unsustainable, especially given that the team controlled a huge portion of tokens. Crypto news outlets highlighted the tokenomics changes as the fundamental issue – “significant changes in its tokenomics” were officially cited as the cause of the decline. In fact, Binance’s own research post-mortem explicitly attributed the crash to the doubling of supply and shift to inflationary model that we discussed.
Exchange actions
Exchanges like Binance took steps to protect traders once the crash started. Binance issued warnings on the OM/USDT pair about the tokenomics changes and high volatility. Such warnings are uncommon – it shows that even exchanges viewed the situation as extraordinary. Some smaller exchanges froze OM trading temporarily, according to community reports, likely due to liquidity issues.
The OM saga underscores how important it is for crypto investors to do due diligence and watch for warning signs. Tokenomics can be complex, and big holders (“whales”) can dramatically move markets. If you’re trading or investing in tokens, here are a few tips and tools that can help you avoid similar disasters:
The crash of OM Mantra token serves as a cautionary tale. A token that climbed +30,000% in a year on hype came crashing down over -90% in a day due to underlying weaknesses. It reminds us that in crypto, fundamentals eventually matter – unsustainable tokenomics or poor distribution will catch up to a project no matter how strong the narrative. As an investor or trader, always look under the hood: examine the supply, know who holds the tokens, and be aware of upcoming unlocks or changes.
While OM’s technology and vision for real-world assets on blockchain are promising, the token’s collapse shows the market’s verdict on its economic design (at least for now). Could OM recover? Possibly, if the team rebuilds trust and the Mantra chain sees real adoption. But it will be a long road. In the meantime, the best we can do is learn from this episode. Stay informed, be cautious of red flags, and consider using tools like MC² Finance to rigorously vet tokens before jumping on the next big hype. In crypto, knowledge and timing make all the difference – don’t be the last one holding the bag when the music stops.
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