Venus Protocol, a prominent DeFi borrowing and lending platform, has recently encountered suspicious activity regarding the $THE pool. In this respect, there is a possibility of a Flash Loan attack, raising concerns across the DeFi community. As per the official X post of Venus Protocol, only the $CAKE and $THE markets seem to be impacted at the current stage. Hence, amid the ongoing investigation, the early indications point toward a likely link to a refined exploit dealing with illiquid collateral.
Due to this unusual situation, Venus Protocol has paused all borrows and withdrawals of $THE.
Venus Protocol Faces Concerns of Flash Loan Exploit as Attacker Targets $THE and $CAKE Pools
The announcement from Venus Protocol reveals that the platform is conducting an investigation into the abnormal activity dealing with the $THE pool. Specifically, the malicious actor utilizes $THE tokens in the form of collateral for the borrowing of diverse assets. The respective assets included $BNB, $BTCB, and $CAKE. This enabled manipulation of the market prices while it could also lead to large-scale liquidations.
Keeping this in view, the community is speculating on the exploitation of a staggering 42M $THE liquidation. This figure reportedly accounts for a total value of $14M. The blockchain onlookers pointed out that the attacker may have manipulated the low-liquidity conditions while dealing with the $THE pool for artificial price inflation.
Collateral-Based Manipulation Triggers Questions over DeFi Security
Such a manipulation is a vulnerability in diverse DeFi networks that depend mostly on collateral lending. The investigation of Venus Protocol aims to identify whether the incident happened due to an outside market manipulation or a protocol-level weakness. If the attacker successfully executes the malicious strategy of $THE accumulation and further sale at a high price level, it could cost an estimated $14M to Venus Protocol. Hence, while the platform has disclosed the expectation of damage to the $CAKE and $THE markets, the community is growing more and more cautious while further details are to be provided amid ongoing investigation.
