Wednesday, October 30, 2024

Linear Finance Attack: Liquidity Crisis As lUSD Drops to Zero

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On September 21, 2023, Hong Kong-based decentralized finance (DeFi) platform, Linear Finance, confronted a safety breach that left its group reeling. The attacker, exploiting a vulnerability, minted an endless provide of lAAVE tokens. These have been then swiftly exchanged for the protocol’s stablecoin, lUSD, on the Linear Trade. The speedy gross sales of those tokens on platforms like PancakeSwap and Ascendex led the value of lUSD to plummet to zero.

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The Sequence of the Assault

The attacker neatly executed their technique by profiting from the limitless minting potential of the lAAVE tokens. As soon as they’d an virtually infinite provide, they traded these tokens for the Linear USD stablecoin (lUSD) on the Linear Trade. They subsequently offered the stablecoins on in style exchanges, PancakeSwap and Ascendex. The relentless promoting stress brought on the lUSD value to crash, successfully draining its liquidity.