On September 21, 2023, Hong Kong-based decentralized finance (DeFi) platform, Linear Finance, faced a security breach that left its community reeling. The attacker, exploiting a vulnerability, minted an endless supply of lAAVE tokens. These were then swiftly exchanged for the protocol’s stablecoin, lUSD, on the Linear Exchange. The rapid sales of these tokens on platforms like PancakeSwap and Ascendex led the price of lUSD to plummet to zero.
The Sequence of the Attack
The attacker smartly executed their strategy by taking advantage of the limitless minting potential of the lAAVE tokens. Once they had an almost infinite supply, they traded these tokens for the Linear USD stablecoin (lUSD) on the Linear Exchange. They subsequently sold the stablecoins on popular exchanges, PancakeSwap and Ascendex. The relentless selling pressure caused the lUSD price to crash, effectively draining its liquidity.
Immediate Response by Linear Finance
In the aftermath of the security breach, Linear Finance’s team sprang into action to control the damage and safeguard their users’ assets:
- Protocol Contracts Suspended: To halt any further exploitative activities, all protocol contracts that allowed for token minting, burning, or exchanging were immediately paused.
- Disabling the lUSD Bridge Contract: Linear Finance has temporarily disabled the bridge contract for its stablecoin, lUSD.
- Tracking Down the Attacker: A top-tier industry team has been hired to trace the perpetrator(s) and ensure they face justice.
- Shared Information with Exchanges & Authorities: Wallet addresses associated with the exploit have been disclosed to major exchanges and relevant authorities to monitor and possibly halt any malicious activities.
Commitment to Users
Linear Finance issued a statement expressing deep regret and seeking the patience of its users: “Restoring the protocol and un-doing the damage for our users will be our highest priority until the issue is fully resolved.” The team is working diligently to mend the platform and assures regular updates for its community.
The status of the ongoing investigation and the timeline for reinstating the liquidity of the Linear USD token remains awaited. However, Linear Finance remains steadfast in its commitment to offer a secure platform for its users in the realm of decentralized finance.
In the ever-evolving world of DeFi, security challenges can emerge, but it’s the response and resolution that truly defines a platform’s integrity. With the proactive steps Linear Finance is taking, the DeFi community watches with hope for a swift recovery.
