Decentralized finance protocol Linear Finance has reported an attack that has resulted in liquidity being drained in its Linear USD (LUSD) token. It is the latest DeFi exploit in what has been a busy month for them so far.
On September 21, Linear Finance reported that it was subject to an attack that resulted in the draining of all LUSD liquidity on both PancakeSwap and Ascendex.
DeFi Exploit Season
The attacker was able to mint an unlimited supply of LAAVE and subsequently traded the liquid asset to LUSD on the Linear Exchange. They then sold the tokens on PancakeSwap and Ascendex decentralized exchanges.
The team has halted all smart contracts and bridges on the protocol, it stated in a blog post. There have been no updates on the DeFi protocol’s X (Twitter) feed since the initial alert.
The Linear Team said they have engaged an “industry-leading team to track the attacker(s) and bring them to justice.”
“Wallets known to have taken part in the exploit have been shared with all major exchanges and authorities. Restoring the protocol and un-doing the damage for our users will be our highest priority until the issue is fully resolved.”
There were no further details of the attack or the amount lost at the time of writing.
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The protocol supports cross-chain liquid and synthetic asset trading. It has a collateralized debt pool that allows users to deposit collateral to mint Linear USD, which is used to trade synthetic assets on the Linear Exchange.
The protocol is governed by the LINA token, which is used for voting and staking rewards. Furthermore, Linear Finance offers two main tokens: LINA is used for governance and staking, and LUSD is a stablecoin pegged to the US dollar used to trade synthetic assets.
LUSD Collapse
According to DeFiLlama, Linear Finance’s total value locked is around $8 million. Moreover, it doesn’t appear to have tanked as a result of this DeFi exploit.
The same cannot be said about the protocol’s stablecoin. LUSD collapsed to zero when the stablecoin liquidity pools were drained.
Remarkably, the protocol’s LINA token appears to be unaffected by the DeFi exploit. LINA was trading flat on the day at $0.011 at the time of writing.
The DeFi token has actually gained 3.5% over the past week but remains down 96% from its March 2021 peak of $0.298.
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