Is Venus in trouble again? Actually, it's not a hacker attack, but rather an old vulnerability being exploited.
Today, Venus Protocol released a statement regarding the THE market incident, and the situation is quite different from what many people think.
Many people's first reaction was "flash loan attack,"
but the official confirmation states: this is not a flash loan attack, but an old code vulnerability being exploited.
To briefly explain how this happened:
The attacker had actually been preparing for a long time.
Over the past 9 months, he had been gradually buying THE tokens, slowly establishing a dominant supply position on Venus.
Then he exploited a vulnerability in the protocol related to the supply cap:
Originally, the supply cap for THE was 14.5 million,
but the attacker bypassed the normal deposit process by directly transferring THE into the protocol contract, thereby breaking through this limit.
Next, he started doing one thing: manipulating the price + circular borrowing.
Because the on-chain liquidity for THE is relatively low,
the attacker first gradually pushed the price up on DEX.
When the TWAP oracle gradually synchronized this price:
1️⃣ Used the inflated price of THE as collateral
2️⃣ Borrowed assets such as BNB and CAKE
3️⃣ Bought more THE
4️⃣ Continued to push up the price
5️⃣ Increased collateral again
This cycle once pushed the price of THE from $0.27 to $0.53.
In the end, the position was liquidated, but a portion of bad debt was left in the protocol.
My own view is actually quite simple:
The Venus protocol has indeed faced issues before; there have been several security incidents historically.
However, it has a very realistic advantage:
It is backed by the Binance ecosystem.
Many times, if there is a major problem,
Binance often steps in to cover or promote compensation, which is something that many DeFi protocols lack.
So from a usage perspective:
There is definitely some risk
But compared to many wild DeFi projects, Venus has a thicker safety cushion
At least I will continue to use it, just managing my positions well.
Today, Venus Protocol released a statement regarding the THE market incident, and the situation is quite different from what many people think.
Many people's first reaction was "flash loan attack,"
but the official confirmation states: this is not a flash loan attack, but an old code vulnerability being exploited.
To briefly explain how this happened:
The attacker had actually been preparing for a long time.
Over the past 9 months, he had been gradually buying THE tokens, slowly establishing a dominant supply position on Venus.
Then he exploited a vulnerability in the protocol related to the supply cap:
Originally, the supply cap for THE was 14.5 million,
but the attacker bypassed the normal deposit process by directly transferring THE into the protocol contract, thereby breaking through this limit.
Next, he started doing one thing: manipulating the price + circular borrowing.
Because the on-chain liquidity for THE is relatively low,
the attacker first gradually pushed the price up on DEX.
When the TWAP oracle gradually synchronized this price:
1️⃣ Used the inflated price of THE as collateral
2️⃣ Borrowed assets such as BNB and CAKE
3️⃣ Bought more THE
4️⃣ Continued to push up the price
5️⃣ Increased collateral again
This cycle once pushed the price of THE from $0.27 to $0.53.
In the end, the position was liquidated, but a portion of bad debt was left in the protocol.
My own view is actually quite simple:
The Venus protocol has indeed faced issues before; there have been several security incidents historically.
However, it has a very realistic advantage:
It is backed by the Binance ecosystem.
Many times, if there is a major problem,
Binance often steps in to cover or promote compensation, which is something that many DeFi protocols lack.
So from a usage perspective:
There is definitely some risk
But compared to many wild DeFi projects, Venus has a thicker safety cushion
At least I will continue to use it, just managing my positions well.