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Venus Protocol Loses $11M Due to Chainlink Suspension of LUNA Price Oracle

Venus Protocol Loses $11M Due to Chainlink Suspension of LUNA Price Oracle
Decentralized finance (DeFi) protocol Venus has been added to the lengthening list of those affected by the collapse of the Terra ecosystem this week.

The Venus Protocol has been hit hard by the collapse in LUNA token prices. On May 13, the DeFi platform made an announcement stating that a price discrepancy on the platform has led to an exploit resulting in a multi-million dollar loss. Venus is a decentralized algorithmic money market protocol on BNB Chain.

The protocol gets its price feeds from Chainlink oracles which are where the problems began. Chainlink suspended the price feed due to extreme market conditions with the LUNA token.

Official team statement on the Chainlink LUNA/USD Price Feeds situation — ChainLinkGod.eth (@ChainLinkGod) May 13, 2022

It stated that the LUNA price on Venus was last listed at about $0.107, however, the market price was closer to $0.01 at the time. “In order to de-risk this situation, the protocol was paused using PauseGuardian via multisig,” it stated .

Venus Protocol suspension

Venus reported that upon investigation, it was discovered that there were two large deposits of LUNA at the errant price which were used to borrow assets on the platform.

“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 totaling around $13,500,000.”

Industry analyst Colin Wu confirmed that the protocol lost $11.2 million due to Chainlink’s suspension of LUNA price updates.

Venus suspended the protocol and stated that it had a “Risk Fund” that will be utilized to remedy the shortfall resulting from the incident.

It added that a proposal to resume the system had been launched and it will commence operations again in 48 hours. All liquidity is still contained within the protocol and no liquidations will take place during this period, it confirmed.

Dear Venus Community, Due to the unanticipated suspension of Chainlink's LUNA price feed, Venus has taken a precautionary measure to protect our users and is currently paused. A VIP to unpause Venus following the disabling of LUNA has been launched: — Venus Protocol (@VenusProtocol) May 13, 2022

According to DefiLlama , Venus Protocol has around $1 billion in total value locked and is the second-largest platform on the Binance Chain. TVL has dumped 28% over the past 24 hours due to the incident, however further withdrawals have now been suspended.

XVS price reaction

Contrary to expectations, the protocol’s native token XVS has actually surged 26% over the past 24 hours.  XVS was trading at $4.17 at the time of press according to CoinGecko.

However, XVS has been battered a whopping 45% over the past week during the broader crypto market meltdown. The token is now a painful 97% down from its May 2021 all-time high of $147.

LUNA, meanwhile, has collapsed to zero becoming one of the few crypto assets to stamp a 100% loss from its peak.
The post Venus Protocol Loses $11M Due to Chainlink Suspension of LUNA Price Oracle appeared first on BeInCrypto . shares this Contents always with License.

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