Crypto traders betting on the recently famous ConstitutionDAO’s PEOPLE tokens recorded over $9 million in liquidations on Friday, data from analytics tool Coinglass shows.
The plunge followed a broader decline in crypto markets, one that saw large-cap tokens like Solana, Terra and Uniswap fall by as much as 9% as of Friday morning.
Some 17,000 participants of the ConstitutionDAO raised $40 million in November to purchase a copy of the U.S. Constitution – in what was one of the largest such collective efforts involving cryptocurrencies.
The collective lost out to hedge fund Citadel’s founder Ken Griffin – who snapped up the piece with a winning bid of $43 million; reportedly because his son told him to – and they were later refunded their donated funds in the form of PEOPLE.
PEOPLE has no utility and offers no governance rights to holders. But this hasn’t stopped crypto natives from trading up the token to a fully diluted market cap of $839 million as per CoinMarketCap. And the trading frenzy is leading to losses.
PEOPLE traded as high as $0.15 on crypto exchange OKEx on Friday morning, dropping to as low as $0.09 in mid-London hours before seeing aggressive buying at that price level and recovering to $0.11 at press time.
People trading PEOPLE
The move, however, saw traders lose over $9 million on PEOPLE’s futures product – a financial instrument offered by OKEx that allows traders to bet on prices of the token without holding the physical asset.
Interestingly, both longs and shorts took a hit. Of the approximately $9 million in total liquidations, $4.99 million occurred on ‘long’ positions-or the trades betting on upward price movements on people, while the remaining $4.1 million worth occurred on ‘short’ positions, meaning those betting on declining prices of people.
Liquidations are said to occur when exchanges automatically close out a trading position after asset prices reach a certain value, leading to the initial capital put up by traders getting forfeited. The trade is then said to be ‘liquidated.’
Liquidations occur predominantly on bitcoin (BTC) and Ethereum’s ether (ETH), the most-traded cryptocurrencies, followed by large-cap cryptos like Solana’s SOL and Terra’s LUNA. But Friday saw the PEOPLE tokens – a relative newcomer to such lists – rack up the most losses for traders compared to other altcoins.
How did PEOPLE come into existence?
The Ethereum-based PEOPLE tokens were distributed as a refund mechanism to contributors of ConstitutionDAO, an iconic Decentralized Autonomous Organization (DAO) – a term wholly-decentralized organization run on computer rules decided upon by participants to reach a common aim, in this case, that of purchasing the constitution.
Participants could either claim or redeem at the equivalent of 1 ether (about $4,200 as per CoinGecko at press time) worth of PEOPLE. The tokens have no intrinsic value, but that didn’t stop a nearly 12,000% price appreciation of the tokens since a low of $0.0009 on Nov. 21.
Meanwhile, ConstitutionDAO has reached a dead end and has now run its course as per a note on the project’s website.
But it lives on in crypto history books and on liquidation lists.