Business

Terra (LUNA) collapses (-100%), Venus Protocol loses $11 million by ricochet

Terra (LUNA) collapses (-100%), Venus Protocol loses  million by ricochet
Written by madishthestylebar

Terra Luna does collateral damage – Since last weekend, the Terra Luna protocol has been at the heart of the news. Thus, its UST stablecoin gradually moved away from its dollar benchmark. Unfortunately, the protocol never succeeded in raising the bar. A situation that precipitated the project into a death spiral. In addition, Terra Luna dragged down other protocols, notably opening up an attack vector on the Venus protocol.

Terra Luna: the descent into hell

We are not going to go into detail about the fate of Terra Luna. In short, the stablecoin UST lost its dollar standard. Despite several attempts by the Luna Foundation Guardthe UST never returned to normal.

Faced with this cataclysm, the developers of Luna have tried to set up a Recovery plan, which unfortunately had little effect. At the same time, the token LUNA experienced a descent into hellgoing from over $60 to pennies in the space of three days.

Regrettably, this event was not without consequences for the entire ecosystem. Thus, some protocols were collateral victims of the tragic fall of Terra Luna.

>> Come and take your first steps into the Bitcoin universe on Binance (affiliate link) <

Venus Protocol: a new victim of Terra Luna

Venus is a DeFi protocol hosted on the BNB Smart Chain. The protocol developers announced via a blog post that the protocol has undergone $11 million loss following the Terra Luna affair.

This case is rooted on the side of the protocol chain link, known to be the driving force behind most DeFi. Thus, the Chainlink contract to recover the price of LUNA against the dollar triggered a safety mechanism when the price of LUNA reached $0.1.

As a result, the data stream was automatically paused. Unfortunately, the consequences were catastrophic. Indeed, many protocols were not notified of this stoppage of the data flow.

As a result, protocols continued to process the LUNA token with Chainlink data at $0.1 per LUNA. In reality, this one was rather trading around $0.01.

Obviously, the Venus teams were quickly informed of the situation and were able to suspend the LUNA before the damage was too great. Unfortunately, arbitrage bots had already done their job.

Announcing the temporary shutdown of Venus – Source: Twitter.

Thus, many bots or traders already had took advantage of the difference between the price of LUNA on Venus and its price on other protocols. In practice, this resulted in the loss of $11.2 million for the Venus protocol.

Once again, reliance on this central body that is Chainlink can be extremely risky, especially in the context of such radical market movements. Chainlink has recently been the scene of a debate regarding its decentralization. Indeed, all of the protocol’s contracts are based on a multisignature key, which, if it were to be corrupted, could sign the death warrant of DeFi.

LUNA is no more, but the crypto market is still here, and for a long time. It’s never too late to get interested in Bitcoin and Ethereum! Don’t wait any longer to prepare for the future by going to register on the Binance platform, THE absolute benchmark in the sector (affiliate link).

#Terra #LUNA #collapses #Venus #Protocol #loses #million #ricochet

About the author

madishthestylebar

Leave a Comment