(Retweet) Curve was initially sorted out by the attack, what impact will it bring?
Earlier today, Vyper discovered that its version of the compiler did not correctly implement reentrancy locks. Malicious actors exploit re-entrancy attacks to repeatedly re-enter contracts, resulting in unauthorized operations or theft of funds. Subsequently, multiple protocols were attacked, and the funds used were initially estimated to be as high as 70 million U.S. dollars. Some of these funds are held by white hat hackers and MEV bots and may be recovered.
In the Curve ecosystem, four capital pools were attacked, including the DeFi lending protocol Alchemix, the DeFi public product JPEG'd, and the DeFi synthetic asset Metronome. After the CRV/ETH pool was hacked, the liquidity of CRV on the chain became poor, resulting in price fluctuations on the chain. Although CRV suffered a tragic sell-off, hackers still benefited, and the wallet still holds 7 million CRV.
Curve founder Michael Egorov has applied for a large number of loans against CRV on multiple lending agreements, among which Aave has applied for the most loans. If the CRV price reaches the liquidation threshold, the agreement will be forced to liquidate the CRV position.
In order to avoid being liquidated at the time of sale, Michael Egorov has been making loan debt repayments, and the new liquidation threshold on his Aave has now been lowered to 0.37. Bad debts seem inevitable if their positions are liquidated, and lending protocols with bad debts have to dip into insurance funds, for example Aave will sell AAVE tokens aggregated by its security modules to cover any shortfall.
Widespread volatility and unknowns have led many to suggest withdrawing liquidity on Curve. Aave's USDT pool utilization rate exceeded 50%, and the lending rate soared to 91%, which put tremendous pressure on Michael Egorov's position. If the interest rate does not drop, the position may be liquidated within a few days.
