DeFi Protocol Linear Finance Suffers Liquidity Drain in LUSD Token Attack


Decentralized finance (DeFi) protocol Linear Finance has fallen victim to an attack that resulted in the complete depletion of liquidity in its Linear USD (LUSD) token.

Following the incident, Linear Finance’s team apologized to the community and implemented various safety measures.

LUSD Price Collapses to Zero

On Sept. 21, Linear Finance announced it had experienced a security breach, leading to the complete drainage of all LUSD liquidity on the PancakeSwap and Ascendex decentralized exchanges.

Despite the security breach, Linear Finance’s total value locked stands at approximately $8 million, suggesting that the protocol has not been severely affected. However, the same cannot be said for its stablecoin. LUSD experienced a complete collapse in value due to the liquidity drain. The native token of the DeFi protocol, LINA, seems to have remained stable despite the attack. Currently, LINA is trading at $0.011.

The attacker managed to exploit the system by minting an unlimited supply of LAAVE tokens, which were then traded for LUSD on the Linear Exchange. Subsequently, the acquired LUSD was dumped on PancakeSwap and Ascendex, causing a stablecoin value drop.

Linear Finance Team’s Response

In response to the attack, the Linear Finance team has apologized while taking immediate measures to safeguard the protocol, its assets, and its user community. These actions include pausing all protocol contracts that facilitate token minting, burning, or exchanging to prevent further exploits.

The team has also disabled the Linear bridge contract for LUSD, thus cutting off the attacker’s potential future access. Thirdly, they have enlisted the expertise of an industry-leading security team to track down and bring the attacker(s) to justice. Lastly, information about wallets involved in the exploit has been shared with major exchanges and relevant authorities.

Linear Finance, known for supporting cross-chain liquidity and synthetic asset trading, operates a collateralized debt pool that enables users to deposit collateral and mint LUSD, which is subsequently used for trading synthetic assets on the platform.

The protocol’s governance is driven by the LINA token, which is utilized for voting and staking rewards. Linear Finance offers two primary tokens: LINA for governance and staking and LUSD, a stablecoin pegged to the US dollar that facilitates synthetic asset trading.

Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.

Source link

You might also like
Leave A Reply

Your email address will not be published.