Crypto traders betting on the recently famous ConstitutionDAOâ€™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 â€“ in what was one of the largest such collective efforts involving cryptocurrencies.
The collective lost out to hedge fund Citadelâ€™s founder Ken Griffin â€“ who snapped up the piece with a winning bid of $43 million; reportedly because his son told him to â€“ 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 hasnâ€™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 PEOPLEâ€™s futures product â€“ 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 â€˜longâ€™ positionsâ€”or the trades betting on upward price movements on people, while the remaining $4.1 million worth occurred on â€˜shortâ€™ 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 â€˜liquidated.â€™
Liquidations occur predominantly on bitcoin (BTC) and Ethereumâ€™s ether (ETH), the most-traded cryptocurrencies, followed by large-cap cryptos like Solanaâ€™s SOL and Terraâ€™s LUNA. But Friday saw the PEOPLE tokens â€“ a relative newcomer to such lists â€“ 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) â€“ 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 didnâ€™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 â€œhas now run its courseâ€ as per a note on the projectâ€™s website.
But it lives on in crypto history books and on liquidation lists.