Since the imposion of the Terra stablecoin (UST), stablecoins have been going through a tough preiod, especially due to increased regulatory scrutiny. Unfortunately, negative sentiments about the sector could be set to worsen with the Nirvana stablecoin (NIRV) losing its peg.
Nirvana Suffers Flash Loan Attack
Nirvana Finance is a DeFi protocol that allows users to earn up to 100% annual yield on locked assets via the volunteered creation and destruction of tokens based on user demand, as ANA tokens are bought from and sold on the protocol.
On Thursday, July 28th, the Solana-based yield protocol suffered a $3.5 million exploit. The hacker took advantage of a vulnarability which allowed them to carry out flash loans to manipulate and drain the liquidity pools.
On-chain data shows that the hacker borrowed 10 million USDC from Solend in a flash loan to attack Nirvana. The network was tricked into minting $10 million worth of ANA, which the hacker then swapped for $3.5 million USDT. Following the attack, the TVL of Nirvana was left at just 7 cents.
Nirvana’s Stablecoin Loses Its Peg
The attack on Nirvana Finance led to a funding gap in the protocol, causing the protocol’s stablecoin to lose its peg. In the hours that followed the hack, the stablecoin lost 91% of its value, dropping from $1 to $0.09.
The 24 hour price chart for Nirvana (NIRV). Source: CoinMarketCap
Over the last 24 hours, the algorithmic stablecoin of Nirvana has managed to regain 62% of its value, pushing its price up to $0.122, but not by enough to bring it into parity with the U.S. dollar.
On the Flipside
- Nirvana has posted a public plea to the hacker, asking for the return of the stolen funds in exchange for $300,000.
Why You Should Care
The hack and subsequent de-pegging of the Nirvana stablecoin has onl served to put even more pressure on the stressed Solana ecosystem.
Read about the recent Solend flash loan attack below:
Crema Finance Struck a Deal with Hacker to Recover $9M in Lost Funds
To find out more about Europe’s stablecoin regulations, read:
The ECB Requests Expedited Regulation for Stablecoins