On Thursday, a significant attack on the Linear Finance decentralised finance (DeFi) protocol resulted in a catastrophic loss of LUSD liquidity on both PancakeSwap and Ascendex.
LUSD’s value was reduced to zero as a result of the malicious attack, with serious ramifications for the whole cryptocurrency ecosystem.
Details of the attack
The attacker took advantage of a flaw in the protocol to produce an endless amount of AAVE illegally. After being sold on PancakeSwap and Ascendex, this asset was then exchanged to LUSD on the Linear Exchange, completely depleting LUSD liquidity.
The Linear team has responded by putting in place a number of safety measures, including halting any protocol contracts that permit token creation, burning, or trading and turning off the Linear bridge contract for LUSD. They have apologised sincerely to their users and asked for their patience and support as they work to resolve the matter by enlisting a top industry team to track the attackers and restore the protocol.
Linear Finance’s recent XRP listing
Prior to the attack, Linear Finance had seen substantial development, especially with the listing of the cryptocurrency XRP, which is linked to Ripple.
This acquisition was a significant turning point for both organisations, since XRP had previously been delisted from Coindesk, Kraken, and Bitstamp following a favourable court decision in the Ripple dispute.
Linear Exchange, which debuted in January 2021, is a newcomer to the crypto sector but has already established itself as a strong competitor in the DeFi market thanks to a $1.8 million seed round in 2020 lead by investment companies including NGC Ventures and CMS Holdings.
