Essence Finance: A Rug Pull or Just Mismanagement?

A notable stablecoin project on the Scroll ecosystem, Essence Finance has come under intense scrutiny. This is due to the near-total collapse of its stablecoin CHI

Stablecoin project Essence Finance, operating within the Scroll ecosystem, has faced intense scrutiny following the near-total collapse of its stablecoin, CHI.

According to data from GeckoTermina, CHI experienced a drastic 98% drop in value on October 26. The stablecoin, which was initially trading at $1, saw its value plummet to $0.0134.

This sudden price crash has sparked fears among investors and the broader crypto community regarding a potential rug pull.

As reported by Wu Blockchain, over $20 million in collateral was removed from the project, prompting concerns and speculation among market participants.

In the wake of the price crash, بازار participants have taken to social media to express their concerns regarding Essence Finance's transparency and security practices.

Many have questioned the project's intentions behind the move, especially given the lack of communication from Essence Finance.

The project's last official post on its X (formerly Twitter) account was on September 10. Since then, the project has only engaged in reposting, further escalating community suspicion.

With the absence of any official statement from Essence Finance, investors have voiced their frustration and disappointment.

Now, many investors are seeking clarity on the stablecoin's unexpected decline in value and the project's financial stability.

Essence Finance's silence has left investors feeling uneasy and used. Now many investors are looking for clarity on the stablecoin's value and the project's financial stability.

The project is yet to make an official statement about the crash as the last official post from its X (formerly Twitter) account was on September 10. Since then, the project has only been reposting, this revelation as further escalate community suspicion.

Impact on Scroll Ecosystem Amidst Rapid Growth

The CHI crash has overshadowed what has otherwise been a period of growth and progress for the Scroll ecosystem, which is renowned for its zkEVM (zero-knowledge Ethereum Virtual Machine) technology.

This technology has made Scroll a popular high-performance, Ethereum-compatible Layer 2 blockchain.

Recently, Scroll achieved a milestone with a total value locked (TVL) of above $1.17 billion — a number achieved through projects like Essence Finance and other decentralized finance (DeFi) applications.

Additionally, its native token, SCR, has secured listings on major exchanges such as Binance and Bybit, while Coinbase is enabling perpetual futures trading for the token. All of these highlight the project's potential.

However, the collapse of a prominent stablecoin on the platform raises concerns about the ecosystem's overall risk management. The market has been quick to point out these inconsistencies, with many wondering if other projects within the ecosystem could face similar issues.

Community Response and Market Repercussions

The Essence Finance token's crash has also led to increased market activity, with CHI’s trading volume surging to over $45 million amid a wave of panic selling.

With only 133 recorded holders, CHI's drop has increased concerns about concentrated risk and potential liquidity issues within Essence Finance's pools.

It is worth noting that Essence Finance has not yet addressed the situation, leaving investors to rely on speculative posts on social media.

In the wake of the crash, Twitter has become a hot spot for the discussions, with Wu Blockchain’s post talking about the missing $20 million in collateral quickly spread across the crypto space.

Scroll ecosystem stablecoin project Essence Finance is suspected of rugpulled, its stablecoin CHI has fallen by more than 92% to $0.077 in the past 24h, more than $20 million of collateral is suspected to have been removed. The last tweet was posted on September 11. The audit…

Many people in the Web3 community are now calling on Essence Finance and Scroll to address the situation directly to restore confidence. As the news spreads, the future of CHI and its impact on the Scroll ecosystem remain uncertain.