Solana-Based Nirvana Undergoes a Flash Loan Attack
A Solana blockchain-based yield protocol for algorithmic stablecoins, Nirvana, has gone through a flash loan attack of up to $3.5M as the exploiter manipulated it and ditched the liquidity pools, as shown by the blockchain data.
Nirvana Hit by a Flash Loan Attack
The price of ANA (the local token of the protocol) suddenly declined by more than 80% during the recent few hours. Apart from this, the protocol’s stablecoin named NIRV witnessed a drop of 8 cents in its U.S. dollar peg at the moment, as indicated by the data taken from CoinGecko. The consumers were permitted by Nirvana protocol to acquire up to 100% profits on an annual basis over the locked assets through the creation as well as the destruction of the tokens per the consumer demand as users could sell and purchase ANA tokens on the protocol.
A worth of approximately $3.5M in ANA tokens (that were locked on Nirvana) was lost in the respective attack. Flash loans count as a frequently utilized method by the attackers to obtain the funds to carry out their exploits on ecosystems based on decentralized finance (DeFi). An amount of nearly $182M was drained from a stablecoin protocol “Beanstalk” in April, while Inverse Finance witnessed a loss of $1.2M in the previous month.
Flash Loan Attacks Bother DeFi Sector
With the loans, the traders are provided with unsecured funds as a debt from the lenders with the utilization of smart contracts rather than the 3rd parties. No collateral is required in this case because the transfer is only considered complete when the borrowed funds are repaid to the lenders. This signifies that a defaulting borrower’s request for a flash loan would lead the smart contract to terminate the transfer and the lender would have its funds returned.
Data given by the blockchain explorers bring to the front that 10M USDC taken from Solend (a lending instrument) was utilized in a flash loan. That was the time when the minting of almost $10M worth in ANA had been carried out and the respective amount was swapped to obtain $3.5M in USDT from the treasury wallet of Nirvana. As put by DeFi Llama’s data, the whole liquidity pool saw efficient drainage in the exploit.
The trading operations of Nirvana were terminated on the behalf of the developers of the venue just after the attack, as mentioned in the admins’ massages on the official channel of the protocol on Telegram.
