Terra-Chainlink Suspension Causes $11M In Losses For Venus Protocol

Venus, a decentralized finance (DeFi) protocol, has been added to the growing list of those affected by the Terra ecosystem’s collapse this week.

The decrease in LUNA token values has had a significant impact on the Venus Protocol. On May 13, the DeFi platform said that a price disparity on the platform had resulted in a multi-million dollar loss due to an exploit. Venus is a BNB Chain-based decentralized algorithmic money market protocol.

The protocol derives its pricing information from Chainlink oracles, which is where the issues started. Due to the LUNA token’s severe market circumstances, Chainlink has paused the price feed.

The LUNA price on Venus was last reported at around $0.107. However, the market price at the time was closer to $0.01. “The protocol was suspended using PauseGuardian through multisig to de-risk this circumstance,” it said.

Terra fell, bringing Venus alongside

According to Venus, an inquiry revealed two substantial deposits of Terra’s LUNA at the incorrect price, which were utilized to borrow assets on the platform.

Chainlink’s suspension of LUNA pricing updates cost the protocol $11.2 million, according to industry expert Colin Wu.

Venus halted the process and said that it had a “Risk Fund” that would be used to make up for the shortfall caused by the occurrence.

It also stated that a proposal to restart the system had been submitted and that it would begin operations in 48 hours. It stated that all liquidity is still held inside the protocol and that no liquidations will take place during this time.

Venus Protocol is the second-largest platform on the Binance Chain, according to DefiLlama, with roughly $1 billion in total value locked. Due to the event, TVL has dropped by 28% in the last 24 hours; however, further withdrawals have been halted.

The protocol’s native token, XVS, has risen 26 percent in the last 24 hours, contrary to forecasts. According to CoinGecko, XVS was trading at $4.17 at the time of publication.

XVS, on the other hand, has lost 45 percent in the last week due to the larger crypto market crash. The token was currently down 97 percent from its all-time high of $147 in May 2021.

Meanwhile, Terra’s LUNA has plummeted to zero, making it one of the few crypto-assets to have seen a complete loss.