Decentralized Finance Protocol Linear Finance Reports Liquidity Drained in LUSD Token
Linear Finance, a decentralized finance (DeFi) protocol, has recently experienced an attack resulting in the draining of liquidity from its Linear USD (LUSD) token. This incident adds to the growing list of DeFi exploits that have occurred this month.
The Attack and Its Impact
On September 21, Linear Finance disclosed that it had been targeted in an attack that led to the depletion of all LUSD liquidity on PancakeSwap and Ascendex, two decentralized exchanges. The attacker exploited the system by minting an unlimited supply of LAAVE, which was then traded for LUSD on the Linear Exchange. The stolen tokens were subsequently sold on PancakeSwap and Ascendex.
In response, the Linear Team has taken immediate action by halting all smart contracts and bridges on the protocol. They are also working with a leading team to identify the attacker(s) and hold them accountable.
Limited Information Available
At present, there is limited information regarding the attack or the exact amount lost. However, the team has shared information about wallets involved in the exploit with major exchanges and authorities.
About Linear Finance
Linear Finance is a protocol that facilitates cross-chain liquid and synthetic asset trading. It operates through a collateralized debt pool where users can deposit collateral to mint LUSD for trading synthetic assets on the Linear Exchange. The protocol is governed by the LINA token, which is used for voting and staking rewards. Additionally, Linear Finance offers two main tokens: LINA for governance and staking, and LUSD as a stablecoin pegged to the US dollar for trading synthetic assets.
LUSD Collapse and LINA Token Stability
Despite the attack, Linear Finance’s total value locked remains at around $8 million according to DeFiLlama. However, the protocol’s stablecoin, LUSD, collapsed to zero due to the draining of its liquidity pools.
Interestingly, the protocol’s LINA token has not been significantly affected by the exploit. At the time of writing, LINA was trading flat at $0.011. Although it has experienced a 3.5% increase over the past week, it remains down 96% from its peak in March 2021.
Hot Take: Linear Finance Faces Liquidity Drainage in LUSD Token Attack
Linear Finance has fallen victim to an attack resulting in the loss of liquidity for its LUSD token. This incident highlights the ongoing challenges faced by DeFi protocols in terms of security and vulnerability to exploitation. While Linear Finance has taken immediate action and is working towards resolving the issue and holding the attacker(s) accountable, it serves as a reminder for users and investors to exercise caution when participating in DeFi platforms. As the DeFi space continues to evolve, it is crucial for protocols to prioritize robust security measures to safeguard user funds and maintain trust within the ecosystem.
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