Exploits and hacks where millions of bucks are lost on the various cryptocurrency networks are often reported creating furore in the crypto industry.
A recent Oracle exploit led to a massive $100 Million liquidation on the Compound, a lending protocol in a matter of just 24 hours.
Oracle Exploit Led To $100 Million Liquidation
As per the data by Loanscan, half of the DAI collaterals on the platform were liquidated by a user farming the COMP token. Reportedly the user was able to farm COMP token for $49 Million as he becomes uncollateralized.
The prices of the Stablecoin DAI increased massively after the news of the Oracle Exploit broke on Thursday, ginormous liquidations happened as the various loans went under-collateralized.
The Liquidation was possible due to a malicious attack with erroneous DAI-Dollar-Peg Data provided by Coinbase, which led the stablecoin DAI price to $1.30, making several users uncollateralized on the Compound network. As Compound protocol retrieves its pricing data from Coinbase Pro, the pushed price of DAI, there was a forced liquidation of the uncollateralized borrower’s position.
Being one of the most widely used DeFi protocol, the Total value Locked of the protocol is around $1.55 billion. The platform enables traders and investors to earn yields by giving out funds. When other users procure funds from the protocol, they stake their crypto collaterals in lieu of the borrowed money. DAI stablecoin is widely used on the platform as collateral to obtain funds.
This is just another case of massive liquidations and funds loss on the Defi space. Earlier on the Compound protocol, $6.3 Million were liquidated in July 2020. With the new $100 million exploit, the crypto analysts have criticized Compound for solely relying on the data and price feeds from Coinbase.
The analysts thus back the use of decentralized sources like Chainlink Price Feeds that procure data from multiple sources like independent node operators and data providers; thereby giving price through a median calculated on the prices.
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