Solana DeFi Protocol Suffers Flash Exploit – Nirvana (NIRV) Stablecoin Loses Dollar Peg

Since the Terra stablecoin (UST) imploded, stablecoins have faced a tough time and increased regulatory scrutiny.

Again Another Stablecoin Lost It's USD Peg By 91%

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.

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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.

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

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Milko Trajcevski

Milko Trajcevski is a DailyCoin news reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs). Location: Skopje, Macedonia