Anchor Protocol has an oracle problem leading to bad debt

On the evening of May 28, when the LUNA community was buzzing with the return of version 2.0, a technical problem related to oracle led to the Anchor Protocol (an important kernel in the Luna ecosystem) incurring bad debt.

Vae Victisb account said that when the LUNA 2.0 version was deployed, the oracle price recorded $5 data. However, the old token format bLUNA (which had a market value of ~$0.001) was also recorded as $5.

The real value of deposited funds should have been around $200,000. After noticing the issue, a user took a loan of 40 million UST and withdrew it at a massive $800,000 profit.

Other users also noticed the issue with the price oracle on the platform and tried to exploit it but faced an error almost immediately. The platform’s team was fast enough to fix the bug and avoid additional losses.

Currently, on the Twitter page, Anchor has not tweeted about this incident. The most recent tweet is still updating on the new chain implementation – Terra 2.0. Also in the series of tweets of the Vae Victis account, it “seems” that the team has solved the above oracle issue and tried to suppress the attacker’s loan position.

According to the data on the transaction tracker, the vertical column with a (+) sign represents the money flowing into the wallet, and the vertical column with a (-) sign is the money flowing out of the attacker’s wallet.

From block #7809994 (May 28), we see that the attacker used Luna to swap to bLUNA. Then continuously loop, load bLUNA and borrow UST -> use UST to buy LUNA -> use LUNA to buy bLUNA -> continue to load bLUNA into Anchor. This loop stops at block #7815711, when bLUNA is loaded, it cannot continue to borrow UST but will be refunded.

Some users even accused Do Kwon himself of performing an exploit since he is the only one able to perform such a thing purposefully.

The whole cryptocurrency market was waiting for the final launch of LUNA 2.0, but Do Kwon’s attempt to revive the network ended up as another catastrophe as the new token lost 70% of its value out of the gate, causing even more controversy in the community considering only a small portion of funds were unlocked and more selling pressure is expected to reach the market.

Traders and investors are still calling the Terra co-founder out, assuming he is the one responsible for the 100% crush of LUNA token and de-pegging of UST stablecoin.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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