Linear Finance, a decentralized finance (DeFi) protocol, experienced a severe attack on Thursday, leading to a catastrophic loss of LUSD liquidity on both PancakeSwap and Ascendex.
The malicious exploit caused LUSD to plummet, striking its value down to zero, and posing significant implications for the broader cryptocurrency community.
Details of the attack
The assailant exploited a vulnerability in the protocol, enabling the illicit minting of an unlimited supply of AAVE. This asset was subsequently traded to LUSD on the Linear Exchange before being sold on PancakeSwap and Ascendex, resulting in the complete draining of LUSD liquidity.
In response, the Linear team has enacted a series of protective measures, pausing all protocol contracts that allow token minting, burning, or exchanging and disabling the Linear bridge contract for LUSD. To address the situation, they've enlisted a leading industry team to track the attackers and restore the protocol, while expressing sincere apologies to their users and requesting their patience and support.
Linear Finance’s recent XRP listing
Prior to the attack, Linear Finance had showcased significant growth, particularly with its listing of XRP, Ripple-affiliated cryptocurrency.
This addition marked a key development for both entities, as XRP had been relisted on major exchanges like Coindesk, Kraken, and Bitstamp following a favorable court ruling in the Ripple case.
Launched in January 2021, Linear Exchange is a recent entry into the crypto ecosystem but has quickly positioned itself as a prominent contender in the DeFi space, fueled by a $1.8 million seed round in 2020 led by investment firms like NGC Ventures and CMS Holdings.