Decentralized Finance protocol Linear Finance was under attack and attackers exploited the protocol that caused to fall the LUSD stablecoin value dractically. The Linear Finance team tweeted about this attack on social media X. They requested people not to buy and trade LUSD. This is not expected but it happened. Now that's reality.
The attackers exploited the vulnerability of the Linear Finance protocol and that allowed them to mint an unlimited supply of LAAVE tokens. Then they quickly traded LAAVE tokens for LUSD stablecoins on the Linear Exchange. Finally, the attackers dumped the LUSD on PancakeSwap and Ascendix which drained the liquidity That made the LUSD stablecoin value collapse to zero.
Linear Finance took action immediately after detecting the attack and exploit in the protocol. They stopped the operation of token minting, exchanging, and burning. Not only that, the Linear Finance team also disabled the Linear Bridge contract for LUSD temporarily. I like their quick action as soon as they find out the exploits.
They contacted an industry-leading security team to do more investigations and look into the whole incident. They have already notified major exchanges and the concerned authority to track the attackers so that they have more chances to recover the loss. What already happened, you cannot stop that. But your quick action and response can help to find the best possible solutions.
The Linear Finance team will update the community about their progress and what they would do to overcome this. Hackers target the Decentralized Finance (DeFi) protocol to attack and we have already seen different DeFi protocols become victims of exploits and hacks.
Linear Finance has native LINA tokens and it is used for the governance and staking token in the protocol. It has LUSD stablecoin that is pegged to the US dollar. Once the LUSD stablecoin value went up to $1.45. It is that stable and now the LUSD price is $0.00001158.
When there is an exploit of any crypto platform, native tokens of that platform are usually affected pretty badly. The interesting thing is that the LINA price is quite stable in spite of exploiting the Linear Finance protocol. LINA is trading around $0.011.
Hackers are active in finding vulnerabilities in the system to attack crypto platforms. Fixing vulnerabilities and strengthening secure measures are supposed to be the top priority. Otherwise, surviving in the crypto ecosystem will be a big challenge for any crypto platform.
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Reference: 1.
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It sucks to hear about the exploits but at least it doesn't look like it's the worst case scenario for the investors yet.
Hope they can fix the issues and make sure it does not happen in the future. Still, I think gaining people's trust could be challenging when something like this happens.