The developers announced that the Kujira team’s positions were targeted, resulting in the creation of an operational DAO (decentralized autonomous organization) with the aim of assuming ownership of the Kujira Treasury and core protocols.

The crisis caused valuable KUJI tokens to lose 55% of their value and severely affected the network’s liquidity positions.

The Kujira Foundation, an organization that contributes to both the development and operation of the Cosmos-based Kujira, has noticed that KUJI assets in its wallets have begun to be automatically liquidated as of Thursday. These liquidations occurred because some leveraged positions turned into millions of dollars of bad debt.

In particular, the loans Kujira received with publicly allocated KUJI tokens became inadequately collateralized due to the general volatility of the market. This caused the value of KUJI to decline, leading to more liquidations, lower prices, and a downward cycle.

Liquidation means the automatic closing of a trader’s leveraged positions in case of partial or complete loss of initial collateral. Such situations can be avoided if a trader provides additional funds to keep his position open.

In a message published on Telegram on Thursday, a Kujira team member stated that leveraged positions were taken in the hope that they would create value in the network’s application set.

“As a team, we thought it would be the best use to leverage some of the operational funds and distribute them across the ecosystem. “We hoped to initiate liquidity and efficiency this way,” he wrote. “We really felt that this step was the right move.”

However, these plans unfortunately coincided with various attacks. The team stated that they did not want to cause pity, but wanted to explain the sequence of events. People targeting team positions has caused a constant struggle since the creation of these positions.

The amount of funds Kujira locked in March 2024 was over $124 million. However, this value dropped to $50 million earlier this week and to $35 million following the KUJI token liquidations on Friday morning. This huge decline seriously affected the financial situation of the organization.

The team decided to create a decentralized autonomous organization (DAO) to solve this crisis. This DAO will assume ownership of the Kujira Treasury and its underlying protocols and will primarily aim to safely reduce debt. There are 14 million KUJI in the DAO, worth $5.5 million at current prices.

The DAO is expected to control the configuration of Kujira’s underlying protocols and provide transparency. Along with upcoming governance panels, this DAO will offer clear visibility into how protocols work and allow the community to propose changes that will be voted on by DAO members. This is considered an important step in terms of both financial transparency and community engagement.