The USDC vault sits at $3.06 million in deposited assets, according to PiggyBank's own dashboard. The SPYx vault shows $823,000 and JitoSOL $639,000. PiggyBank's total value locked stands at $2.70 million, per DefiLlama.
The drawdown is notable because USDC vaults are marketed as lower-risk products. Users deposit stablecoins expecting the principal to stay largely intact while automated strategies generate yield.
PiggyBank said it entered the position roughly a month before the June 6 disclosure, deploying $100,000, or about 2% of portfolio value at the time. The strategy involved buying locked LAB tokens at a discount through an over-the-counter desk, then shorting LAB perpetual futures contracts to hedge out the price risk.
Basis trading of this kind aims to pocket the spread between the discounted spot price and the futures price. It is generally considered lower-volatility than outright directional exposure. When it goes wrong, however, the losses can be amplified because the short and the spot position can move adversarially at the same time.
In PiggyBank's case, LAB experienced what the protocol described as "violent manipulation," thin liquidity, and deeply negative funding rates. Negative funding rates mean the cost of holding the short increases over time. The team said those conditions made the hedge unsustainable, so it closed the short position.
