A June 10 report said LAB market manipulation, thin liquidity and deeply negative funding broke the hedge, leaving the USDC vault down about 15% while locked tokens remain excluded from NAV until Aug. 14.
PiggyBank said its June 6 LAB basis trade suffered a net drawdown of about $579,000 after manipulated spot prices and deeply negative funding rates broke the strategy’s perpetual futures short hedge. In a June 10 report, the DeFi yield protocol said it had deployed around $100,000, or about 2% of assets at the time, into an OTC purchase of discounted locked LAB tokens paired with a short hedge. The hedge was later closed as thin liquidity and negative funding made it uneconomic to maintain. PiggyBank said the locked LAB position is now marked at roughly $1.35 million, more than 13 times entry, but is excluded from NAV until the first unlock on Aug. 14 because the tokens cannot yet be sold. That accounting treatment leaves the USDC vault down about 15%, with SPYx down about 12% and JitoSOL about 9%. PiggyBank previously said users captured in a June 6 snapshot will be compensated in USDC, funded through the NAV gap, future LAB sales from Aug. 14 to Oct. 14, and 50% of future platform revenue. The trade also drew criticism because ZachXBT had flagged LAB weeks earlier as a token dominated by insiders and linked to manipulative market-making and discounted OTC deals.