This is a supplemental announcement regarding the unanticipated Chainlink LUNA price feed suspension on Venus Protocol that occurred yesterday. The events caused by the suspended price feed affected several protocols among which was Venus. The Venus team was able to catch the issue quickly and implement protective measures to minimize impact on the protocol and its users. In this announcement we will address the facts with the community about what transpired.
On Thursday May 12 at about 09:20 UTC, Chainlink’s price feed for LUNA hit a price floor threshold and was suspended by Chainlink with a price of $0.107. The LUNA market on Venus continued operating while the spot price continued to drop.
LUNA had the following parameters on Venus, which were deemed to be safe:
We became aware of a price disparity 4 hours later when the spot price was about $0.01 while suspicious accounts depositing large amounts of LUNA were identified with these addresses:
At the time of the exploit being detected, the team made the decision to use the fastest means of mitigation available, which was to pause the protocol at approximately 15:15 UTC (activated by multisig tx on the PauseGuardian contract).
At that time, subsequent borrows resulted in a shortfall of about $14,200,000 across these accounts after initial tally:
Teams at PeckShield, Binance Security, and Security Alliance were notified to track and freeze exploiters’ funds with partner teams. Binance Security has identified one of the exploiters and they are being contacted to encourage return of funds.
Remediation and next steps
Venus Risk Fund with $15m in balances will pay down the full amount of the shortfall over time according to the risk fund allocation. In the interim, we have also negotiated with BNB Accelerator Fund to provide Venus with an immediate loan to cover liquidity (if required due to any existing shortfall). This is testament to the confidence the BNB community demonstrates in Venus.
Future impact resulting from unanticipated price feed suspension will be mitigated by implementing robust monitoring to ensure feeds are working as intended. When a feed ceases to respond after a certain number of blocks, and/or a significant discrepancy in price is detected beyond a predetermined threshold, a notification will be generated to alert operators and a fallback feed will be activated.
In the event that a secondary feed is not available, a fail safe on individual markets will be implemented and initiated to pause them until the issue can be resolved. We are also currently in discussions with Chainlink to implement additional measures and ensure there is communication at the first instance of any similar events going forward, as well as understand what, if any, further actions need to be taken.
Further token listings will not be supported until all remediations have been completed including monitoring, secondary feeds, and fail safe for individual markets.
Plan for Resuming Venus Protocol
Venus Protocol will resume operating 48 hours from the passing of VIP-60, as controlled by governance timelock. UST and LUNA price feeds have been set to ‘0’, temporarily restricting accounts with positions on those markets from interacting with the protocol. We will be working continuously to safely off-board those markets and remediate users affected by this incident.
Numerous Venus pools are still available on Binance.com Staking, these pools will continue to operate once the protocol resumes and funds are safe. In addition, the Venus Mini App launch on Binance.com will resume next week.
Liquidity Incentive Plan
A liquidity incentive plan from BSC Fund is being prepared and will be unveiled in the near future. This incentive will give XVS Holder’s a substantial XVS Vault APY Boost.
Venus is only as strong as its community and it’s through these events that the community resolves to become stronger and more resilient for the sustainability of our ecosystem and the whole of Decentralized Finance. Venus continues to evolve and we invite talented and passionate professionals from all industries to join the journey on our core team with one of many roles that are open. Bring your questions directly to the team on our Discord Server.