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BTC $74,981.60 +0.11%
ETH $2,337.21 -0.64%
BNB $628.87 +0.81%
XRP $1.43 +1.76%
SOL $88.15 +3.13%
TRX $0.3259 +0.13%
DOGE $0.0979 +1.29%
ADA $0.2553 +1.88%
BCH $448.89 +1.46%
LINK $9.44 +1.35%
HYPE $43.60 -3.93%
AAVE $113.62 +6.43%
SUI $0.9853 +0.78%
XLM $0.1660 +3.30%
ZEC $333.90 -2.73%

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Venus Protocol: THE market event originated from a supply cap vulnerability, not a flash loan attack

Venus Protocol released a statement regarding the THE market event, stating that this incident was not a flash loan attack, but rather a result of the attacker exploiting a supply cap vulnerability in the old code of the protocol. The team indicated that the attacker had been accumulating THE tokens for about 9 months, gradually establishing a dominant supply position on Venus.The announcement pointed out that the attacker bypassed the normal deposit process by directly transferring THE tokens into the protocol contract, thereby breaking through the supply cap limit of 14.5 million THE. They manipulated DEX prices by taking advantage of the low on-chain liquidity. As the external price was gradually reflected by the TWAP oracle, the attacker borrowed assets (such as CAKE, BNB, etc.) against the inflated collateral value, then bought more THE to drive up the price, and continuously transferred THE into the vTHE market to increase the collateral value. This cycle once pushed the price from about $0.27 to about $0.53, ultimately leaving bad debt in the protocol after the positions were liquidated.Venus stated that it has currently suspended the THE market, reduced its collateral factor to 0, and suspended withdrawals. Additionally, as a precautionary measure, the collateral factors for 8 markets including BCH, LTC, AAVE, POL, FIL, TWT, UNI, and lisUSD have also been reduced to 0. The team and security partners are continuing to investigate and will release a complete post-analysis report in the future.

Vitalik: The original vision for Ethereum L2 is no longer applicable, and a new path needs to be found

Vitalik Buterin posted on the X platform, stating that there has been an increasing discussion about the ongoing role of L2 in the Ethereum ecosystem. Due to the slow progress of L2 entering phase 2, and the expansion of L1 itself, it is expected that the Gas limit will significantly increase by 2026. This means that the original vision of L2 as Ethereum's "branded sharding" is no longer applicable, and new paths are needed.Vitalik Buterin pointed out that L1 no longer needs L2 as branded sharding, and that L2 cannot or is unwilling to meet the attributes required for true branded sharding. He suggested that L2 should identify value points beyond "scalability," such as privacy, efficiency for specific applications, extreme levels of scalability, non-financial application design, ultra-low latency, and built-in oracles. When handling ETH or other Ethereum assets, L2 should at least reach phase 1 and support maximum interoperability with Ethereum. Additionally, Vitalik Buterin stated that he has become more convinced of the value of native Rollup precompiles in recent months, especially after having the ZK-EVM proof needed for scaling L1. This precompile would make EVM verification without a security committee feasible. He believes that research should be conducted on how to design this precompile so that it can verify the EVM portion when L2 includes "EVM and other content." This would make achieving secure, robust, and trustless interoperability with Ethereum easier and enable synchronous composability.
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