Crypto News- Recently; Linear Finance, a prominent decentralized finance (DeFi) protocol, found itself at the center of a security breach, leading to the loss of liquidity in its Linear USD (LUSD) token. This incident is part of a larger pattern of DeFi vulnerabilities in what has already been a tumultuous month for the industry.
LUSD Stablecoin in Linear Finance Reduced to Zero Following DeFi Exploit
On September 21, Linear Finance disclosed that it had fallen prey to a malicious attack that resulted in the complete drainage of LUSD liquidity on both PancakeSwap and Ascendex.
The attacker ingeniously exploited the system, creating an unlimited supply of LAAVE tokens, which were subsequently exchanged for LUSD on the Linear Exchange. These fraudulently obtained tokens were then offloaded on the PancakeSwap and Ascendex decentralized exchanges.
In response to this breach, the Linear Finance team acted swiftly by suspending all smart contracts and bridges connected to the protocol. Unfortunately, no further updates have been issued through the DeFi protocol’s Twitter account since the initial alert. The Linear Team, however, has taken proactive measures by enlisting a reputed “industry-leading team” to identify and bring the perpetrator(s) to justice.
Linear Finance plays a vital role in enabling cross-chain liquidity and facilitating the trading of synthetic assets. It operates a collateralized debt pool that allows users to deposit collateral, subsequently minting Linear USD for use in trading synthetic assets on the Linear Exchange.
The governance of the protocol is overseen by the LINA token, which serves multiple functions, including voting and earning staking rewards. In addition to LINA, Linear Finance offers another key token, LUSD, a stablecoin pegged to the US dollar, specifically designed for trading synthetic assets.
According to DeFiLlama, the total value locked in Linear Finance is estimated to be around $8 million. Remarkably, it appears that the protocol itself has not suffered a significant decline in value due to this DeFi exploit. Regrettably, the same cannot be said for the protocol’s stablecoin, LUSD which has been rendered worthless as a result of the depletion of its liquidity pools.
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