DeFi protocols report losses as attackers exploit LUNA price gap

The seemingly endless Terra (LUNA) freefall has affected two decentralized finance (DeFi) protocols due to a price gap, as the Chainlink price feed for LUNA is suspended amid extreme market conditions.

Avalanche-Based Liquidity Protocol Blizz Finance reported that with LUNA’s price locked at $0.10, attackers were able to deposit millions in LUNA to “borrow all collateral.” As a result, Blizz Finance mentioned that their protocol was cleared before their team could take a break. The team has apologized to those affected.

In an official statement, Venus Protocol Explain that when Chainlink interrupted the LUNA price feed, the LUNA price on their platform remained at $0.107 while the market price was at $0.01. The platform would have lost $11.2 million due to price suspension. However, the platform has indicated that it will use its risk fund to remedy this shortfall.

Although it seems that the cause of the fiasco is the suspension of Chainlink price feeds, some believe that the losses are due to the neglect of the protocols. Twitter user TheSoftwareJedi underline that Chainlink’s streams have the tools to avoid the problem and that it’s the protocols’ fault for not using them.

Related: Untethered: Here’s everything you need to know about TerraUSD, Tether, and other stablecoins

Meanwhile, the Terra blockchain was shut down as its token plummeted by more than 99%. According to Terraform Labs, the blockchain network was shut down to prevent governance attacks. However, his team coordinated to restart the network almost immediately.

As LUNA continued to fall, crypto exchange Binance pulled its LUNA/Tether (USDT) pair. Taking precautionary measures, the exchange announced on Thursday that it would pull the pair if the LUNA price drops below 0.005 USDT. LUNA has already fallen below this price and is now trading at $0.000029 at the time of writing, according to coin news site CoinGecko.



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