Last month, the Helium Foundation proposed to migrate their project over to the Solana blockchain. Proposed in HIP-70, it was aimed at improving the operational efficiency of the Helium blockchain.
The Helium Network rewards participants in their native token, $HNT, for providing low-power network coverage.
While the news was nothing shocking, it led to a 35% fall in $HNT prices, which was then attributed to it.
However, a thread on twitter shows otherwise.
Go Fast, Break Things?
One of the many features of the Helium network is an additional incentive token, known as $MOBILE.
By providing 5G hotspots, users can earn these tokens, which are then redeemable for $HNT after a certain period.
However, user Arman Dezfuli-Arjomandi reports that a bug in Binance credited users with 1 $HNT per $MOBILE, instead of less than 0.001 $HNT per $MOBILE.
With only 100 million $HNT tokens in circulation, this meant that 5% of the floating $HNT supply was credited to $MOBILE depositors.
Furthermore, it implies that other customer’s deposits were drained to make up for this amount.
As such, their wallet address for $HNT showed an almost zero balance following the error.
Binance’s $21.6M Naked Short
Those who received the tokens created out of thin air dumped it on the market, depressing $HNT prices.
Since then, prices have fallen steadily over the last month, and $HNT now sits at 35% off it’s August peak.
However, Binance now lacks approximately 4.8 million $HNT, which it may attempt to buy on the open market. With only a few million in trading volume every day, filling such a large buy order would mean a huge spike.
Furthermore, this effectively translates into a short position, as they are technically in “debt” to sell $HNT. If Helium network token prices skyrocket, it could result in unlimited losses for Binance.
At the time of writing, Binance CEO and Founder Changpeng Zhao has not commented on the situation.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: Chain Debrief