Yet another decentralized lending and algorithmic stablecoin protocol was hacked yesterday, with $3.5 million stolen from its treasury via what appears for now to be a one-off exploit.
As a result, Nirvana Finance’s NIRV stablecoin lost its peg — it’s at 15 cents as of this writing, and the ANA token used to maintain it is down 80%. ANA was also used to provide collateral for NIRV loans. If that sounds familiar, that’s because another decentralized finance (DeFi) algorithmic stablecoin, terraUSD, and its LUNA partner coin failed on a spectacular scale in May, costing investors $48 billion.
See also: How a Stablecoin’s $48B Collapse Rippled Across Crypto
But that’s where the similarity ends. TerraUST died in loss-of-confidence based run, while ANA/NIRV was hacked and tricked it into releasing the entire $3.5 million worth of Tether’s USDT stablecoins in its treasury wallet, CoinDesk reported on Wednesday (July 27).
DeFi hacks are becoming more frequent, with the amount lost — $4 billion — now surpassing the $3.2 billion lost to centralized cryptocurrency exchange hacks, according to blockchain analytics firm Crystal Blockchain. That’s significant when you consider that the data on centralized hacks goes all the way back to 2011, while the DeFi data only dates back to 2020 — and that, really, DeFi barely existed before 2021.
Long-term, crypto scams like Ponzi schemes and rug pulls are the biggest losers, accounting for $7.3 billion of the $14.5 billion stolen in the past dozen years.
“The most popular method of crypto-theft until 2021 was the infiltration of cryptocurrency exchange security systems — currently the tendency has moved to DeFi hacks,” Crystal said in its just-released Crypto & DeFi Hacks, Fraud & Scams Report. “This can be explained by the fact that the technology is new and still has a lot of vulnerabilities.”
More to the point, the technology is often rushed out the door by developers eager to get started, often…
