Terra (LUNA) collapses (-100%), Venus Protocol loses $11 million due to rebound

Terra (LUNA) collapses (-100%), Venus Protocol loses $11 million due to rebound

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Terra Luna does collateral damage – Since last weekend, the Terra Luna protocol has been at the center of the news. Thus, its UST stablecoin gradually moved away from its dollar benchmark. Unfortunately, the protocol never managed to raise the bar. A situation that precipitated the project into a death spiral. Additionally, Terra Luna dragged in other protocols, notably opening an attack vector on the Venus protocol.

Terra Luna: the descent into hell

We will not go into details about the fate of earth moon. In short, the stablecoin UST lost its dollar standard. Although several attempts by the Moon Foundation Guardthe UST never returned to normal.

Faced with this cataclysm, the developers of Luna have tried to mount a recovery plan, which unfortunately had little effect. At the same time, the tab LUNA experienced a descent into hellgoing from over $60 to pennies in the space of three days.

Unfortunately, this event was not without consequences for the entire ecosystem. Thus, some protocols were collateral victims of the tragic fall of Terra Luna.

Venus Protocol: a new victim of Terra Luna

Venus is a DeFi protocol hosted on the BNB Smart Chain. The developers of the protocol announced via a blog post that the protocol has undergone $11 million loss after the Terra Luna case.

This case has its roots on the protocol side. link of the chain, known to be the driving force behind most of DeFi. Thus, Chainlink’s contract to recover the price of LUNA against the dollar triggered a safety mechanism when the price of LUNA reached $0.1.

Consequently, data flow stopped automatically. Unfortunately, the consequences were catastrophic. In fact, many protocols were not notified of this data flow interruption.

As a result, the protocols continued to process the LUNA token with Chainlink data at $0.1 per LUNA. Actually this one was trading around $0.01.

Obviously, the Venus crews were quickly informed of the situation and were able to shut down LUNA before the damage was too great. Unfortunately, the arbitration bots had already done their job.

Thus, many bots or traders already had took advantage of the difference between the price of LUNA on Venus and its price on other protocols. In practice, this resulted in the loss of $11.2 million for the Venus protocol.

Once again, trusting this central body that is Chainlink can be extremely risky, especially in the context of such radical market movements. Chainlink has recently been the scene of a debate about its decentralization. In fact, all contracts in the protocol are based on a multi-signature key that, if corrupted, could sign the death warrant for DeFi.

LUNA is no more, but the cryptocurrency market is still here, and for a long time. It’s never too late to get interested in Bitcoin and Ethereum! Don’t wait any longer to prepare for the future Going to register on the Binance platform, THE absolute benchmark in the sector (affiliate link).

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