The MANTRA (OM) token crash: What investors missed and how to avoid future losses

In 2024, the team changed OM's tokenomics after a community vote. The token migrated from an ERC20 token to the native L1 staking coin

The collapse of the MANTRA (OM) token has left investors reeling, with many facing significant losses. As analysts comb through the causes of the collapse, many questions remain.

BeInCrypto consulted industry experts to identify five critical red flags behind MANTRA’s downfall and reveal strategies investors can adopt to steer clear of similar pitfalls in the future.

MANTRA (OM) Crash: What Investors Missed and How to Avoid Future Losses

On April 13, BeInCrypto broke the news of OM’s 90% crash. The collapse raised several concerns, with investors accusing the team of orchestrating a pump-and-dump scheme.

Experts believe that there were many early signs of trouble.

Yet, many overlooked the risks associated with the project.

1. MANTRA Red Flag: OM Tokenomics

In 2024, the team changed OM’s tokenomics after a community vote in October. The token migrated from an ERC20 token to the native L1 staking coin for the MANTRA Chain.

In addition, the project adopted an inflationary tokenomic model with an uncapped supply, replacing the previous hard cap. As part of this transition, the total token supply was also increased to 1.7 billion.

However, the move wasn’t without drawbacks. According to Jean Rausis, co-founder of SMARDEX, tokenomics was a point of concern in the OM collapse.

“The project doubled its token supply to 1.77 billion in 2024 and shifted to an inflationary model, which diluted its original holders. Complex vesting favored insiders, while low circulating supply and massive FDV fueled hype and price manipulation,” Jean Rausis told BeInCrypto.

Moreover, the team’s control over the OM supply also raised centralization concerns. Experts believe this was also a factor that could have led to the alleged price manipulation.

“About 90% of OM tokens were held by the team, indicating a high level of centralization that could potentially lead to manipulation. The team also maintained control over governance, which undermined the project’s decentralized nature,” said Phil Fogel, co-founder of Cork.

Strategies to Protect Yourself

Phil Fogel acknowledged that a concentrated token supply isn’t always a red flag. However, it’s crucial for investors to know who holds large amounts, their lock-up terms, and whether their involvement aligns with the project’s decentralization goals.

Moreover, Ming Wu, the founder of RabbitX, also argued that analyzing this data is essential to uncover any potential risks that could undermine the project in the long term.

“Tools like bubble maps can help identify potential risks related to token distribution,” Wu advised.

2. OM Price Action

2025 has been marked as the year of significant market volatility. The broader macroeconomic pressures have weighed heavily on the market, with the majority of the coins experiencing steep losses. Yet, OM’s price action was relatively stable until the latest crash.

“The biggest red flag was simply the price action. The whole market was going down, and nobody cared about MANTRA, and yet its token price somehow kept pumping in unnatural patterns – pump, flat, pump, flat again,” Jean Rausis disclosed.

He added that this was a clear sign of an issue or problem with the project. Nevertheless, he noted that identifying the differentiating price action would require some technical analysis know-how. Thus, investors lacking the knowledge would have easily missed it.

Despite this, Rausis highlighted that even the untrained eye could find other signs that something was off, ultimately leading to the crash.

Strategies to Protect Yourself

While investors remained optimistic about OM’s resilience amid a market downturn, this ended up costing them millions. Eric He, LBank’s Community Angel Officer, and Risk Control Adviser emphasized the importance of proactive risk management to avoid OM-style collapses.

“First, diversification is key—spreading capital across projects limits single-token exposure. Stop-loss triggers (e.g., 10-20% below buy price) can automate damage control in volatile conditions,” Eric shared with BeInCrypto.

Ming Wu had a similar perspective, emphasizing the importance of avoiding over-allocation to a single token. The executive explained that a diversified investment strategy helps mitigate risk and enhances overall portfolio stability.

“Investors can use perpetual futures as a risk management tool to hedge against potential price declines in their holdings,” Wu remarked.

Meanwhile, Phil Fogel advised focusing on a token’s liquidity. Key factors include the float size, price sensitivity to sell orders, and who can significantly impact the market.

3. Project Fundamentals

Experts also highlighted major discrepancies in MANTRA’s TVL. Eric He pointed out a significant gap between the token’s fully diluted valuation (FDV) and the TVL. OM’s FDV reached $9.5 billion, while its TVL was only $13 million, indicating a potential overvaluation