Assessing Risk and Governance in Tokenized Real-World Assets: Lessons from the MANTRA OM Token Collapse

The collapse of the MANTRA (OM) token in April 2025 serves as a stark reminder of the fragility inherent in tokenized real-world asset (RWA) projects. A once-$6 token plummeted to under $0.50 within hours, erasing $5.5 billion in market value and shaking confidence in DeFi's ability to manage systemic risk. While the event was not driven by fraud or a rug pull, it exposed critical flaws in governance, tokenomics, and liquidity management-issues that investors must scrutinize when evaluating RWA projects.

The Anatomy of the Collapse

The OM token's implosion was triggered by a perfect storm of forced liquidations, concentrated ownership, and leveraged trading. According to a report by SwissBorg, over $66 million in forced liquidations occurred within 12 hours, creating a cascading effect that accelerated the price drop. Centralized exchanges, operating during a period of low liquidity, executed these liquidations at a scale that overwhelmed the market. Data from Gate.io's blog reveals that 43.6 million OM tokens-worth $227 million-were deposited to exchanges in the days leading up to the crash, signaling potential market manipulation or panic selling.

The token's vulnerability was compounded by its supply structure. As of February 2025, 90% of OM tokens were held in a single wallet, creating an imbalance that made the market susceptible to sudden sell-offs. This concentration of ownership, combined with the minting of 888.88 million new tokens in October 2024, diluted value and eroded trust.

Governance and Tokenomics: A Double-Edged Sword

MANTRA's governance model, which centralized control among the team and large investors, failed to incentivize long-term stability.

Forbes highlights how the project's tokenomics prioritized short-term growth over sustainability, with high inflation rates and a lack of mechanisms to absorb sell pressure. The team's denial of insider selling-while likely true-did little to quell suspicions, as on-chain data showed coordinated deposits to exchanges before the crash.

This case underscores a critical due diligence point: investors must assess not only the utility of a token but also its distribution model. A token with 90% of its supply controlled by a single entity or group is inherently risky, as it lacks the decentralization needed to withstand market shocks.

Liquidity and Leverage: A Recipe for Disaster

The role of perpetual futures markets in the collapse cannot be overstated. Analysis of 15 million trades on Binance and Bybit revealed that the bulk of the price decline originated in futures markets, where high leverage amplified volatility. When liquidations began, automated stop-loss orders triggered further selling, creating a death spiral.

This highlights a systemic risk in DeFi: the interplay between spot and derivatives markets. Investors must evaluate how a project's token is traded-particularly in leveraged environments-and whether its liquidity pools can absorb sudden outflows. MANTRA's lack of robust liquidity mechanisms left it exposed to the very forces that now define DeFi's risk profile.

Lessons for Investors: Critical Due Diligence in RWA Projects

The OM collapse offers three key takeaways for investors:
1. Scrutinize Token Distribution: A token's ownership concentration is a red flag. Projects with 50%+ of supply held by insiders or a single wallet should be approached with caution.
2. Evaluate Liquidity Structures: Assess whether a token's liquidity is organic or artificially inflated. MANTRA's reliance on centralized exchanges during low-liquidity periods proved catastrophic.
3. Understand Leverage Exposure: High-leverage derivatives can destabilize even the most fundamentally sound projects. Investors must stress-test a project's resilience to forced liquidations.

MANTRA's post-crash roadmap-announced in May 2025-includes token supply reductions and governance decentralization. While these steps are commendable, they come after a crisis that could have been mitigated with proactive risk management.

Conclusion

The OM token's collapse is a cautionary tale for the RWA space. It demonstrates that even projects with strong fundamentals can fail if governance and liquidity risks are ignored. As tokenized assets gain traction, investors must adopt a rigorous due diligence framework-one that prioritizes transparency, decentralization, and stress-testing. The future of DeFi depends on learning from these failures and building systems that withstand the next crisis.