The collapse of mantra (OM) tokens has caused investors to waver, and many face significant losses. As analysts investigate the cause of the collapse, many questions remain.
Beincrypto consulted industry experts to identify five important red flags behind Mantra’s downfall and uncover strategies investors could adopt to avoid similar pitfalls in the future.
Mantra (OM) Crash: How to avoid what investors miss and future losses
On April 13th, Beincrypto defeated the news of OM’s 90% crash. The collapse raised several concerns, with investors accusing the team of adjusting the pump-and-dump scheme. Experts believe there are many early signs of trouble.
However, many people overlooked the risks associated with the project.
1. Mantra Red Flag: OM Toconemics
In 2024, the team changed OM’s talknomics after the community vote in October. The token has moved from the ERC20 token to native L1 staking coins for the mantra chain.
Additionally, the project adopted an inflation conname model with a supply-free supply that replaces the previous hard cap. As part of this transition, total token supply also increased to 1.7 billion.
However, this movement was not without its drawbacks. According to Jean Rausis, Smardex co-founder, Tokenomics was a concern for the OM collapse.
“The project shifted to an inflation model in 2024, doubling the supply of tokens to 1.77 billion people and diluting the original holders.
Furthermore, team management over OM supply also raised concerns about centralization. Experts believe this is also a factor that could lead to suspicions of price manipulation.
“Around 90% of the OM tokens are held by the team, indicating a high level of centralization that can lead to operations. The team also maintained control over governance that undermines the decentralized nature of the project.”
Strategies to protect yourself
Phil Vogel acknowledged that the concentrated supply of tokens is not necessarily a red flag. However, it is important for investors to know who holds a large amount, retain lockup conditions and whether engagement aligns with the project’s decentralization goals.
Additionally, Rabbitx founder Ming Wu argued that analyzing this data is essential to identify potential risks that could damage the project in the long run.
“Tools like bubble maps can help you identify potential risks associated with token distribution,” advised Wu.
2. OM Price Action
2025 is marked as a year of significant market volatility. The broader macroeconomic pressures are heavier and heavier in the market, with most of the coin experiencing sudden losses. However, OM’s price action was relatively stable until the latest crash.
“The biggest red flag was simply price action. The whole market was falling and I didn’t mind the mantra, but token prices continued to be pumped again in some way, unnatural patterns (pumps, flats, pumps, flats,” Jean Rausis announced.
He added that this is a clear indication of a potential problem or problem in the project. Nevertheless, he noted that technical analysis know-how is required to identify differentiate price actions. Therefore, a lack of knowledge would have easily missed it.
Nevertheless, Rausis emphasized that even untrained eyes can find other signs that something is off, leading to a crash in the end.
Strategies to protect yourself
Investors remained optimistic about OM’s resilience amid the market slump, which cost them millions. Lbank Community Angel Officer Eric He, and risk control advisor, highlighted the importance of proactive risk management to avoid disruption of OM styles.
“Firstly, diversification is important. It limits the exposure of single tokens that broaden capital across projects. Stop loss triggers (for example, 10-20% below the purchase price) can automate damage control in volatile conditions,” Eric shared with Beincrypto.
Ming Wu has a similar perspective, highlighting the importance of avoiding overallocation into a single token. Management explained that diversified investment strategies can help reduce risk and increase overall portfolio stability.
“Investors can hedge potential price drops in their holdings by using permanent futures as a risk management tool,” Wu said.
Phil Vogel, meanwhile, recommended focusing on token liquidity. Key factors include float size, price sensitivity to sales orders, and people who can have a significant impact on the market.
3. Project Fundamentals
Experts also highlighted the major contradictions in Mantra’s TVL. Eric he pointed out a major gap between the full dilution assessment (FDV) of tokens and TVL. OM’s FDV reached $9.5 billion, while TVL is only $13 million, indicating a potential overvaluation.
“The $9.5 billion valuation of $13 million on TVL has cried out instability,” said Forest Bai, co-founder of the visionary venture.
In particular, several issues have been raised regarding airdrops. Jean Lausis called the airdrop “confusion.” He cited many issues, including delays, frequent changes to eligibility rules, and disqualification of half of participants. Meanwhile, the suspicious bot was not removed.
“Airdrop was disproportionately supported, reflecting a lack of fairness, while excluding real supporters,” Phil Fogel repeated.
Criticism grew even further as Fogel pointed out the team’s ties to the suspicious entity and the suspicious initial coin offering (ICO), raising doubts about the project’s credibility. Eric He also said that the mantra had been linked to gambling platforms in the past.
Strategies to protect yourself
Forest Bai validated project team credentials, highlighted the importance of reviewing project roadmap and monitoring chain activities to ensure transparency. He also advised investors to assess community engagement and regulatory compliance to assess the long-term viability of the project.
Ming Wu also emphasized distinguishing between actual growth and artificially inflated metrics.
“It’s important to distinguish between artificially inflated activities through incentives and airdrops and actual growth. Unsustainable tactics like “selling dollars for 90 cents” may generate short-term metrics, but may not reflect actual engagement,” Wu told Beincrypto.
Finally, WU recommended that the background of the project’s team members be investigated to reveal a history of suspicious venture fraud and involvement. This ensures that investors are informed before committing to the project.
4. Whale movement
As Beincrypto previously reported, before crash, the whale wallet associated with the Mantra team reportedly deposited 3.9 million OM tokens on the OKX exchange. Experts emphasized that this was not an isolated incident.
“The massive OM transfer to the exchange a few days ago (43.6 million tokens, about $227 million) was a big warning about the possibility of a sale,” he told Beincrypto.
Ming Wu also explained that investors should pay close attention to such large transfers. This often acts as a warning signal. Additionally, Cryptoquant analysts outlined how investors should pay attention to.
“Om transfers to the exchange have reached $35 million in just an hour, which means that transfers to the exchange are less than $8 million in normal time (usually larger considering the size of the exchange, usually larger considering the size of the exchange). beincrypto.
Strategies to protect yourself
Cryptoquant said investors should monitor the token flow in exchange as they could indicate an increase in price volatility in the near future.
Meanwhile, Risk Management Advisor Eric outlined four strategies to stay up to date with large-scale relocations.
Chain-Throughing: Tools like Arkham and Nansen allow investors to track large transfers and monitor wallet activity. Set Alerts: Platforms like Etherscan and GlassNode notify investors of unusual market movements. Truck Exchange Flow: Users need to track large flows into central exchange. Check Lockup: Dune Analytics helps investors determine if team tokens are being released earlier than expected.
He also recommended focusing on market structure.
“The OM crash proved that market depth was unnegotiable: Kaiko’s data showed that 1% purchase order depth collapsed by 74% before fall. We always check liquidity metrics on platforms like Kaiko.
Additionally, Phil Fogel highlighted the importance of surveillance platforms like X (formerly Twitter). He emphasized the need to analyze liquidity to assess whether the token can handle selling pressure without causing a significant price drop.
5. Involvement of central exchange
After the crash, Mantra CEO JP Mullin quickly denounced the centralized exchange (CEXS). He said the crash was caused by a “reckless forced closure” during the low fluid hours, claiming negligence or intentional positioning. However, Binance pointed out the liquidation between exchanges.
Interestingly, experts have been split slightly on how CEXS contributed to the crash of OM. Forest Bai claimed that CEX liquidation during low-fluidity hours caused the crash to worsen by causing the sale of the Cascade. Eric confirmed this sentiment.
“CEX liquidation played a major role in the OM crash and served as an accelerator. With thin liquidity (1% depth reduced from $600,000 to $147,000), the closure caused the liquidation settlement.
However, Ming Wu called Mullin’s explanation “just an excuse.”
“Analyzing open interest in the OM derivatives market revealed that it was less than 0.1% of OM’s market capitalization. However, what is particularly interesting is that open interest in OM derivatives actually increased by 90% during the market collapse,” Wu told Beincrypto.
According to the executive, this challenges the idea that liquidation or forced closures have caused prices to decline. Instead, it shows traders and investors have increased their short positions as prices fell.
Strategies to protect yourself
CEXS’ involvement remains controversial, but experts addressed key points of investor protection.
“Investors can limit leverage to avoid forced liquidation, choose a platform with a transparent risk policy, monitor open interest in liquidation risk, and hold tokens in their self-justified wallets to reduce CEX exposure,” recommended by Forestbuy.
Eric He also advised that investors should mitigate risk by adjusting leverage dynamically based on volatility. If tools like the ATR or Bollinger Band make turbulent flow a signal, exposure needs to be reduced.
He also recommended avoiding trading during low-liquid periods such as Midnight UTC, where the risk of slipping is the highest.
The Mantra (OM) collapse is a powerful reminder of the importance of due diligence and risk management in cryptocurrency investments. Investors can minimise the risk of falling into similar traps by carefully assessing talknomics, monitoring on-chain data, and diversifying their investments.
With expert insights, these strategies can help guide investors to smarter and secure decisions in the crypto market.
Disclaimer
Following Trust Project guidelines, this feature article presents the opinions and perspectives of industry experts or individuals. Although Beincrypto is dedicated to transparent reporting, the views expressed in this article do not necessarily reflect the views of Beincrypto or its staff. Readers should independently verify the information and consult with experts before making decisions based on this content. Please note that our terms and conditions, privacy policy and disclaimer have been updated.
