Venus Protocol, a decentralized money market, announced on Thursday evening that about $11 million had been lost due to people exploiting the historic collapse of the Luna cryptocurrency and its sister stablecoin UST.
The team behind the Venus Protocol released a statement confirming suspicions that had been floating around for hours about the potential mishandling of the fiasco around Luna.
“Today, we became aware of errant price behavior for LUNA on Venus Protocol. Upon investigation, it was learned that the price feed had been paused by Chainlink due to extreme market conditions,” Venus Protocol explained.
“The price on Venus was last listed at about $0.107 while the market price was $0.01. In order to de-risk this situation, the protocol was paused using PauseGuardian via multisig. Upon this desyncing event, it was discovered that 2 accounts had suspiciously deposited a sum of 230,000,000 LUNA valued at over $24,000,000. Assets were borrowed totalling around $13,500,000.”
Venus Protocol and several other platforms use Chainlink to provide its users with real-time price estimations of the tokens on its platform that are available for lending and borrowing.
But the tool began having issues with Luna on Thursday as the price continued to fall precipitously.
“As a result, it was possible to deposit UST and LUNA as collateral and borrow other tokens, with an underpriced collateral valuation. Liquidable accounts also depend on the Chainlink oracles,” decentralized finance researcher Vali Dyor explained.
Chainlink released its own statement on the issues with its oracles, saying that the minimum value circuit breaker for the LUNA/USD Price Feeds was automatically triggered due to the “unprecedented volatility across the cryptocurrency markets.”
They…
