Luna Cryptocurrency's Collapse Led to Multi-Million-Dollar Exploits, Closure of a Crypto Money Market (therecord.media) 81
The Record reports that the decentralized money market Venus Protocol "announced on Thursday evening about $11 million had been lost due to people exploiting the historic collapse of the Luna cryptocurrency and its sister stablecoin UST."
Venus Protocol and several other platforms use Chainlink to provide its users with real-time price estimations of the tokens on its platform that are available for lending and borrowing. But the tool began having issues with Luna on Thursday as the price continued to fall precipitously. "As a result, it was possible to deposit UST and LUNA as collateral and borrow other tokens, with an underpriced collateral valuation...." decentralized finance researcher Vali Dyor explained.
Venus Protocol says they became "aware of errant price behavior for LUNA," and "Upon investigation, it was learned that the price feed had been paused by Chainlink due to extreme market conditions." "The price on Venus was last listed at about $0.107 while the market price was $0.01. In order to de-risk this situation, the protocol was paused using PauseGuardian via multisig. Upon this desyncing event, it was discovered that 2 accounts had suspiciously deposited a sum of 230,000,000 LUNA valued at over $24,000,000. Assets were borrowed totalling around $13,500,000."
Venus Protocol has a "Risk Fund" that will be used to cover the shortfall, the Record reports. But they added that Venus Protocol wasn't the only one having problems: As the price of Luna cratered overnight, exchanges and markets were forced to make difficult choices on how to approach the cryptocurrency. Binance stopped all trading of Luna and UST on its platform but the moves have done little to stop all cryptocurrency values from being depressed across the board.
DeFi platform Blizz Finance announced that it was attacked in the same way Venus Protocol was, but they did not release an estimate on the losses incurred. But they said the protocol was "drained" before it could stop the process.
And then Blizz Finance posted a post-mortem early Sunday morning: Large amounts of LUNA were deposited and used to drain all available lendable assets... Prior to the incident the Chainlink team did attempt to notify us that the oracle would pause, however we did not receive the message in time. We were unaware of Chainlink's minimum price circuit breaker. This behaviour is not mentioned anywhere within Chainlink's documentation...
Blizz has no treasury or development fund and a significant portion of the stolen assets belonged to our team. As such we regret to announce the protocol has been paused and we do not intend to resume operations. We will be shutting down the front-end and closing official communication channels in the coming days....
We are very sorry for the losses incurred by our users. We thank the community for their support on this journey and deeply regret that this is how it came to an end.
They posted one additional detail on Twitter. "We are reaching out to a Chinese community who is believed to have doxxed individuals who participated in the attacks."
Venus Protocol says they became "aware of errant price behavior for LUNA," and "Upon investigation, it was learned that the price feed had been paused by Chainlink due to extreme market conditions." "The price on Venus was last listed at about $0.107 while the market price was $0.01. In order to de-risk this situation, the protocol was paused using PauseGuardian via multisig. Upon this desyncing event, it was discovered that 2 accounts had suspiciously deposited a sum of 230,000,000 LUNA valued at over $24,000,000. Assets were borrowed totalling around $13,500,000."
Venus Protocol has a "Risk Fund" that will be used to cover the shortfall, the Record reports. But they added that Venus Protocol wasn't the only one having problems: As the price of Luna cratered overnight, exchanges and markets were forced to make difficult choices on how to approach the cryptocurrency. Binance stopped all trading of Luna and UST on its platform but the moves have done little to stop all cryptocurrency values from being depressed across the board.
DeFi platform Blizz Finance announced that it was attacked in the same way Venus Protocol was, but they did not release an estimate on the losses incurred. But they said the protocol was "drained" before it could stop the process.
And then Blizz Finance posted a post-mortem early Sunday morning: Large amounts of LUNA were deposited and used to drain all available lendable assets... Prior to the incident the Chainlink team did attempt to notify us that the oracle would pause, however we did not receive the message in time. We were unaware of Chainlink's minimum price circuit breaker. This behaviour is not mentioned anywhere within Chainlink's documentation...
Blizz has no treasury or development fund and a significant portion of the stolen assets belonged to our team. As such we regret to announce the protocol has been paused and we do not intend to resume operations. We will be shutting down the front-end and closing official communication channels in the coming days....
We are very sorry for the losses incurred by our users. We thank the community for their support on this journey and deeply regret that this is how it came to an end.
They posted one additional detail on Twitter. "We are reaching out to a Chinese community who is believed to have doxxed individuals who participated in the attacks."
Not even a comedy of errors (Score:5, Insightful)
With every story coming out about the collapse of stablecoins and the millions upon millions of dollars people are losing, it is quite clear few, if any, of the people involved in this have any clue how markets work or thought through the entire process.
It's almost as if, "If it sounds too good to be true, it is" might have some truth to it.
Re:Not even a comedy of errors (Score:5, Informative)
It's only starting.
Tether's CTO is now announcing how Bitfinex offers 33% APR for USDT deposits: https://twitter.com/paoloardoi... [twitter.com] . The same company claiming to have ~$80bn in backing reserves.
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Mark. My. Words.
Re:Not even a comedy of errors (Score:5, Insightful)
Nah. This all sounds very catastrophic, but on the grand scale of things, there's simply not enough economical involvement in these pyramid schemes to actually make an impact.
It's all very localized, and since there are no banks involved at all, there won't be any bailouts either.
Sucks for the people that get fucked, but realistically, they don't really matter enough.
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When Tether goes the stock market will be pummeled from the aftershock.
The entire market cap of Tether is only $75bn.
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Yes however the suspicion is that crypto in general is helping to underpin the leverage of many hedge funds and banks. Once Tether goes it starts to put huge pressure on Etherium and Bitcoin. Bitcoin especially, has been rumoured to be at the centre of hedge funds doing pump and dump etc.
The huge drops in share values of the past 3 or 4 weeks along with what are suspected to be forced liquidations will reach a tipping point. It's only going to take a couple of hedge funds sitting on the wrong side of Tether
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"Yes however the suspicion is that crypto in general is helping to underpin the leverage of many hedge funds and banks"
My suspicion is that your suspicion isn't plausible. If by "many hedge funds and banks" you mean many bottom-feeder, new-to-the-party, doomed to fail hedge funds, and no banks at all, I'd give it some credence. Or, if by "helping" you mean an organization is dabbling in it with a financially insignificant part of their capital...
"no one really knows what's going on or how deep the hedge fu
Exactly (Score:1)
and I would say, it's well beyond a mere suspicion at this point.
Re: Exactly (Score:2)
No.
While bitcoin may not be regulated, treasury management is bound by regulation that's very tight. Google Basel II, III, IV reporting standards, or Finrep and Corep.
No way they're going to be invested heavily into bitcoin, unless they managed to hide it from the regulators, in which case we'll have a lot of fun seeing bankers jump from windows in the near future.
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and I would say, it's well beyond a mere suspicion at this point.
If it's well beyond suspicion then there would be some evidence, otherwise it's just suspicion. What evidence leads you to your conclusion?
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Is Tether used to trade stocks? No. Is Tether bound to selected stocks? Sure. But those stocks won't be useless when Tether goes.
Those stocks will be sold when Tether goes, and frankly, as I said, even Tether just simply isn't large enough to cause more than a short blip.
People really really underestimate how much money goes around in the stock market.
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Here's an NFT of some Kool Aid.
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When Tether goes the stock market will be pummeled from the aftershock.
I hope so. I hope it obliterates the market so people can finally see what a ridiculous snipe hunt all this crypto crap is.
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+1 mod points for Insightful. The crypto fanboys really believe that the world is tied to crypto. It is a science experiment that has had it day, made a few rich, but many poorer for their foolishness. Barnum had it right.
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You are delusional, the market turmoil in crypto will make for light reading for the Wall Street execs out on the Hamptons this weekend. Crypto is a aberration that will disappear into the void and join the likes of AOL, Geo-cities, and other internet dinosaurs. Sorry to hear about your losses in crypto though.
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October 19, 1987 [wikipedia.org], actually. Purely speculative ventures with no inherent value will be the first things to delist.
Hey, at least it isn't 1929 [wikipedia.org] - at least, I hope not.
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It is going to be 2008 all over again.
That was mostly due to the subprime mortgage crisis. The pundits are saying that can't happen again because $REASONS involving changes that were made to the finance industry, and because the continuing everything shortage has kept new housing in short supply. To that I say, it's like Jurassic Park: the market finds a way (to screw you over).
How much cryptocurrency plays into all of this depends entirely on what kind of money got tied up in these shenanigans. If it was mostly rich dudes' hookers & blo
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The pundits are saying that can't happen again because $REASONS involving changes that were made to the finance industry
The pundits are wrong. That's why they're called "pundits" and not "prophets". The fact is that they don't know shit.
For reference, see Jim Cramer and Larry Kudlow- two guys who couldn't pour piss out of a boot with the instructions written on the heel.
The reality is that no one can tell you where the market will be in an hour or a day or a week or a month. And that means that no one has a handle on it, not really. It's like Vegas except you don't actually know what you're betting against or even what game
Re:Not even a comedy of errors (Score:5, Insightful)
2008, the Dot Com crash, and the absolute disaster caused by the Black-Scholls equation, were due to speculators able to gamble with money borrowed from potential future earnings and a tight interdependency of the financial markets.
In the case of money borrowed from the future, the gambling has - at times - exceeded 400% of the entire wealth of the planet because nobody needed the actual money to speculate with it.
In the case of the tight interdependency, the failure of one market brought down others in an outward, unstoppable, cascade effect.
The total speculated on Bitcoin is less than the wealth of a single nation, so although it may bring down a couple of South American nations and possibly contribute to the collapse of the Russian economy, it won't seriously impact the globe.
Nothing is dependent on bitcoin or any other blockchain currency, so it makes no difference to other markets if these fail.
Re:Not even a comedy of errors (Score:4, Insightful)
Any historian would have been happy to tell them all about the tulip craze in 17th century Netherlands, or the South Seas bubble in 18th century Britain, or any one of the many banking panics in 19th century America, or the 1929 Wall St crash.
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Sadly, stuff that happened 20 years ago is outside the memory of a lot of the traders working today. They may have been alive when it happened, but they weren't working in the financial markets at the time, so it just doesn't register with them in the same way.
Re: Not even a comedy of errors (Score:2)
Except that America's vast wealth and global power were mostly built with unregulated markets. America's global power seems to inversely correlated to its regulations over the past half century or so.
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With every story coming out about the collapse of stablecoins and the millions upon millions of dollars people are losing, it is quite clear few, if any, of the people involved in this have any clue how markets work or thought through the entire process.
But but but technology, internet, blockchain
You’re right, people somehow believe that something with no intrinsic value magically is valuable because well, someone says it is. Smart money will teach the suckers a lesson and bail before things go south.
It's almost as if, "If it sounds too good to be true, it is" might have some truth to it.
A fool and their money is also has some truth to it.
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people somehow believe that something with no intrinsic value magically is valuable because well, someone says it is.
Just like the cash in your wallet. The price of everything is dictated by what somebody is willing to pay for it, I sold plenty of BTC and ETH for significant profits, it's not magic and it clearly was valuable. The issue is many people "parked" their funds in something supposedly (and relatively) non-volatile, they believed it was safe there. But "deregulation" has its own challenges and what we have also seen here is that when the storm starts even the "decentralized" nature of these things starts to come
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I almost never see stories about people hitting it big and cashing out. I never see any "feel good" stories about crypto or NFTs, it's always about shit going wrong and money being lost.
99.9% of the crypto-related stories are tales of woe- rug pulls, sudden plunges in value, scams, exploits, daily breaches, and people getting ripped off.
I wonder why that is.
Re: Not even a comedy of errors (Score:2)
My crypto "investments" are up by about 900%.
I stopped moving money into crypto several years ago. At the time I was balancing my crypto investments with my traditional investments, like my 401k and individual stocks (TSLA and MSFT mostly).
When the crypto market took off as it does every four years, my balance of investments got out of whack, so I stopped putting more money into crypto. My goal was essentially to keep shoveling money into stocks in an attempt to balance my portfolio (selling assets to balan
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The problem is that some people became incredibly rich off others speculating and others will ONLY see them and not the ones who are left penniless. Same reason people gamble - they only look at those who succeed (whether legitimately or otherwise) and never look at those who end up in poverty. If they didn't, there would be no Las Vegas, no national lotteries, no slot machines. The existence of these things is only possible because people don't think about risks, only rewards.
Re: Not even a comedy of errors (Score:4, Interesting)
This is the same stuff that lead to the tech meltdown of the pets.com era. There were adults building infrastructure and business, but the sector was dominated by magical thinkers. People who believed a profit could be made with negative revenue. Loss leaders work, and it cost money to acquire customers, but it is not magic.
Like Groupon. It is understandable that inexperienced business owners would think this would be a good idea. My surprise was when established firms fell for the hype, thinking they needed to keep up with the children and look cool.
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Ha ha, Groupon kept calling us and insisting that we sign up. They became so bothersome that we had to block their number.
When they did manage to get through again we told them to fuck off or we'd disembowel them.
They're almost as bad as Yelp, calling and calling and calling until you just want to murder them and then brag about it.
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The sector was dominated by scammers, not magical thinkers. Yes, the greater fools may have outnumbered the people preying on them, but it was the scammers who were really driving things. The same is true today.
The big question is how much of the recent speculation was paid for out of savings vs. borrowing. If people lose their savings, that really sucks for them, but they have only lost what they a
Re: Not even a comedy of errors (Score:2)
The 90s business playbook: true, we're not profitable, but we'll make it up in volume.
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it is quite clear few, if any, of the people involved in this have any clue how markets work or thought through the entire process.
The ones who have knowledge about how markets work are the ones who are now rich.
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With every story coming out about the collapse of stablecoins and the millions upon millions of dollars people are losing, it is quite clear few, if any, of the people involved in this have any clue how markets work or thought through the entire process.
It's almost as if, "If it sounds too good to be true, it is" might have some truth to it.
Exactly. When I hear about people losing their lives savings, that tells me they didn't know shit about diversification and the basic principle of not putting all their damned eggs on the same basket (in particular a high-risk, unregulated basket.)
And this is (Score:5, Informative)
Why friends should not let friends use crypto
Re: And this is (Score:4, Funny)
why friends should not let friends by ponzi crypto and instead buy Algorand, which is really the best tech blockchain out there and doesn't have a magical forever 20 % interest like ust.
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Not spam :)
Luna having network issues (Score:5, Funny)
"stable" is relative (Score:2)
Re:"stable" is relative (Score:5, Insightful)
I think they call it "stable-until-people-try-to-sell-more-than-they-buy-but-with-some-razmatazz-speculative-asset."
Usually abbreviated to "pyramid scheme" though.
Re: "stable" is relative (Score:2)
It's more technically an "algorithmic stablecoin". This is distinct from a backed stablecoin like USDC. Essentially it is an algorithm that TRIES to maintain stability. Like most algorithms, there are range/domain limits.
Anyone who trusts an algorithmic stablecoin without understanding the algorithm and its limits, kind of deserves to lose it all.
I feel sorry for some of these developers (Score:2)
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I heard it was developed with Luna C.
Re:I feel sorry for some of these developers (Score:5, Insightful)
Re: I feel sorry for some of these developers (Score:2)
Most people don't care about decentralized virtual currency trading platform.
You know, I have a Coinbase account, almost entirely to get the "free" defi coin they give out every so often. Almost every time they have some presentation about the system/token du jour, and how that particular clone of the day is somehow different.
I have trouble seeing any difference in any of them.
It all sounds like the great "I'm creating yet another social network!" fad from a dozen years ago.
Many of the DeFi use cases descr
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As I noted in another post, you can have an entirely decentralised currency trading platform that uses real-world fiat currencies. That gives you the stability you mention, but most implementations sacrifice the insurance, trace and reversibility aspects and have a high initial overhead (because you need highly secure hardware and extremely - perhaps provably - secure software to make such a system viable).
Nobody really wants to spend $100 on what amounts to a Pokkit card, so nobody really follows this appr
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Most people don't care about decentralized virtual currency trading platform.
Is it actually decentralized? It seems now that everything has gone tits up they've "paused the network". Being able to just hit pause when things aren't going the way they want doesn't seem like the sort of thing a truly decentralized system would be vulnerable to.
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Decentralized trading platforms using an existing, real-world, currency tend to work better. There's no reason to have a distinct currency, all that you need to decentralize things is to have a token exchange system that lies outside of the traditional financial institutions, where you can buy and sell tokens that are pegged to a specific real-world currency.
Because it's pegged to that currency, you can never have more money going out of the system than went into it (so can't run into exchange difficulties)
Re: I feel sorry for some of these developers (Score:2)
Don't feel sorry for them. These people built fintech products and released them on the masses without proper testing or even a basic understanding of economics. Anyone with half a brain should recognize that's a recipe for scams.
There are essentially no legitimate approaches to developing a cryptocurrency other than the one taken by Bitcoin: release an anonymous white paper demonstrating the power and utility of the platform. If you have a figurehead or a marketing department, you're a scam.
Regular finanical Markets look really stable! (Score:2)
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Think how fun the market would be if it were completely unregulated.
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Re: Regular finanical Markets look really stable! (Score:1)
"Stable" (Score:2)
I don't think they know what that word means.
Venus Protocol sounds like something that happens when a client sharts in the jacuzzi at a massage parlor.
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Stable: noun
A building or an inclosure in which horses, cattle, and other domestic animals are lodged, and which is furnished with stalls, troughs, racks, and bins to contain their food and necessary equipments; in a restricted sense, such a building for horses and cows only; in a still narrower and now the most usual sense, such a building for horses only.
Not theft (Score:5, Interesting)
Re: Not theft (Score:2)
Few have this type of money (Score:2)
Governments and hedge funds. Do you think they will allow a shadow currency to exist outside their control? They can burn a few millions and sink the whole thing without batting an eye
scam? (Score:2, Interesting)
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Re: scam? (Score:3)
Satoshi wasnâ(TM)t trying to scam anyone, but what about the 10,000 other people hyping Bitcoin and reflated currencies, and urging everyone to HODL? Those guys had an obvious ulterior motive â" to increase the value of their own crypto holdings â" and now that theyâ(TM)ve run out of fresh suckers and everything is going tits-up, they arenâ(TM)t looking particularly philanthropic.
Re: scam? (Score:2)
Who is this satoshi guy? Oh, thatâ(TM)s right. Some mystical anonymous oracle no one has seen. Yeah, letâ(TM)s listen to him for advice.
Just because you can, doesn't mean you should (Score:2)
Instead people copy/paste it and fork it a thousand times, creating a shit coin market with wild and risky ideas like Luna, a constantly changing money standard like Ethereum, and a plethora of scam coins that change the contract so you are allowed to buy them but not sell them.
Just because you can fork something, doesn't mean you should.
Another one bites the dust (Score:2)
Re: Another one bites the dust (Score:2)
Gold and real estate have utility other than finding the greater fool and crime, though in the case of gold not very much.
Re: Another one bites the dust (Score:2)
So does Bitcoin. Like cheap international purchases. You ever try to import something from a nation that's not well connected to US banking? I was importing $60 of goods from Indonesia. In order to use traditional banking I would have to wire the money to a local bank for a fee of $75. That's crazy.
But with Bitcoin? About $3 in fees.
One Down... (Score:2)
...many more to go...
https://thenextweb.com/news/ho... [thenextweb.com]
How many dried up, victims of their own scams, before we see the main Funding Source for Ransomware dead and gone forever?
I, for one, can't wait!
"Stable coin" (Score:2)
Lol, the most delicious and amusing part of this whole thing is that they call it a "stable coin".
But yes, I have to admit that anything with a value of "0" is probably pretty stable. For example, that sand blowing across my driveway? Stable as shit, baby! Its value will never decrease, never!
In summation, "See that unsinkable ship? We need your help to get it off the ocean floor."
I'm personally down 8% in the past two months! (Score:2)
My personal investment portfolio is down 8% since The beginning of March. Of course, it's not a "loss" until I sell, which I have no intention of doing. Now to be clear, I own no crypto. This portfolio is in traditional markets. And in order to shave it by 8%, it took broken supply chains, pending food shortages, globally disruptive food shortages, sky high energy costs, the swift loss of significant value in key securities, growing political unrest likely to crest this year...
A handful of folks gaming the