Cointelegraph Team
Cointelegraph
The $3.5 million flash loan attack Solana-based Nirvana Finance saw the price of its stablecoin NIRV and native token ANA fall around 85% apiece.
Solana-based algorithmic stablecoin NIRV has become the latest stablecoin to fail, after dropping 85% from its dollar peg following a hack on adaptive yield protocol Nirvana Finance on Wednesday.
The flash loan attack, which also saw Nirvana Finance’s native token ANA drop by 85%, resulted in the loss of $3.49 million worth of Tether (USDT), with the SolanaFM team being the first to confirm that the funds were siphoned via a flash loan attack on July 27:
Utilizing Solend Protocol’s Flash Loans, the hacker borrowed $10M USDC from the Solend Main Pool Vault which was used to exploit $3.49M USDT from the Nirvana Finance Treasury.
At the time of writing, both NIRV and ANA are down roughly 85% to $0.14 and $1.33 apiece. On Nirvana’s website, it confirms that the protocol was “maliciously hacked and reserve funds are stolen. NIRV and ANA have lost their collateral, and do not have secured market value.”
What we know so far:
— Nirvana Finance (@nirvana_fi) July 28, 2022
Nirvana has been maliciously hacked and the reserves have been stolen.
A flashloan attack was used to steal money. This is not the fault of Solend, but an exploit of Nirvana's program.https://t.co/NkmtHAbAAa
The Nirvana team is now offering the hacker a whitehat bounty of $300,000 and a “cessation” of the investigation into their identity. So far they revealed that the hacker’s wallet tied to a centralized exchange has been flagged.
"Please accept this good faith request and return our treasury for the good of the whole Nirvana community. You have not taken money from VCs or large funds—the treasury you have taken represents the collective hopes of everyday people," it wrote.
To The Nirvana Hacker:
— Nirvana Finance (@nirvana_fi) July 28, 2022
On behalf of the Nirvana Finance community, we humbly ask that you return the stolen funds from our treasury. 1/5
Another algo bites the dust
The algorithmically collateralized NIRV is unironically described by the protocol as a “superstable” token. According to an explanatory thread on Solana Forums, the asset is backed by a network of stablecoins in Nirvana’s reserves via a “decentralized peg delegation.”
“NIRV is always treated as $1 from the protocol’s point-of-view. This dollar value is denominated in ANA tokens. For instance, if the spot price of ANA is $12, the protocol accepts 12 NIRV to purchase an ANA token.”
In this instance, it appears that NIRV was depegged as a direct result of $3.49 million worth of USDT being stolen from Nirvana’s coffers. It marks yet another algo-stablecoin that has been severely depegged in 2022. Beanstalk Farm’s algorithmic stablecoin is sitting at $0.0022 after the protocol was hacked for $182 million in April.
Terra’s first variation of its algo-stablecoin Terra USD also famously imploded following a death spiral that resulted in $40 billion being wiped from the market in May.
How it worked
According to blockchain audit platform OtterSec, a hacker used a program to artificially pump the price of ANA from $8 to $24 via the flash loan. They were then able to mint ANA against the flash loan at the inflated price, and subsequently exchanged the asset for $3.49 million worth of USDT which was drained directly from Nirvana’s treasury.
OtterSec noted that his hack shared similarities with the attack on Crema Finance worth $10 million earlier this month, in which the attacker took out a flash loan from the Solend decentralized finance (DeFi) protocol to inflate pricing data and raid the protocol.
1/ @nirvana_fi was hacked for $3.49 M a few hours ago.
— OtterSec (@osec_io) July 28, 2022
How did this happen? pic.twitter.com/1rAvIqM38c
SolanaFM also noted that the hacker exited the attack by converting “the full USDT amount into USDCet, transferring the funds into an ETH account” via Wormhole’s cross-chain bridge.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
This is why a mere 15% rally in Lido DAO price could be a game-changer for LDO holders
Lido DAO price is following the rest of the market due to the regulatory events that transpired in the last few days. However, the DeFi token is generally unlikely to pursue the path set by any other cryptocurrencies, including the likes of Bitcoin. This might play in favor of LDO.
LINK holders opt to sell as Chainlink price falls by 9% in a week, new investors on the rise
Chainlink price, after following the broader market cues, is nearing a key support level that was last visited by the coin in January this year. This has discouraged LINK holders to the point where selling has become a preferred option. However, newer investors are countering this selling by accumulating, preventing a severe decline.
Optimism price could rally 50% as network upgrade inspires new wave of OP adoption
Optimism (OP) price appears to have found support after a new buyer congestion zone came into effect to prevent the free fall. Accordingly, the Ethereum Layer 2 (L2) token is trading horizontally, giving bulls time to accumulate OP at affordable rates.
Binance CEO addresses chat records disclosed by the SEC
Binance CEO Changpeng Zhao has issued an internal address to company staff, asking them to focus on work and developing products people can use. The internal memo comes after the United States Securities and Exchange Commission (SEC) disclosed chat records between Binance employees in an attempt to support its case against the largest crypto exchange by trading volume.
Top 3 cryptocurrencies that outperformed Bitcoin, Ethereum this week
The US Securities and Exchange Commission’s (SEC) crackdown on cryptocurrencies triggered a correction in the prices of Bitcoin, Ethereum and several altcoins with large market capitalization.