Terra's Mirror Protocol Stops Ongoing Exploit Dead on Its Tracks That Had Already Siphoned Off $2M in Assets 14
Terra (LUNA)

Terra’s Mirror Protocol Stops Ongoing Exploit Dead on Its Tracks That Had Already Siphoned Off $2M in Assets

Avatar photoBy John P. Njuion

Summary:

  • The team at the Terra-based Mirror Protocol has stopped an ongoing exploit that had already siphoned off $2 million in assets.
  • The exploit was made possible through a faulty price Oracle that quoted the price of LUNC at around 5 UST when it was much lower.
  • The attacker then loaded up on collateral and exited with borrowed real assets.

The team at the Terra-based Mirror Protocol has averted further potential damages by stopping an ongoing exploit dead on its tracks, which had already resulted in the loss of$2 million in assets.

According to Terra community member FatMan, the crisis was averted by the team who ‘disabled the usage of mBTC, mETH, mGLXY, and mDOT as collateral.’ This in turn locked out the attacker from using his ill-gotten wealth to drain the rest of the pools from the protocol.

Mirror Protocol Was in the Process of Being Drained with $2M Stolen

The crisis was averted after FatMan and fellow Terra Community members alerted the developer team at Mirror that the protocol was being actively drained with roughly $2 million already stolen.

According to FatMan, the attack was made possible through the utilization of a faulty price oracle that valued LUNC at around 5 UST when it was actually ‘under a micro cent.’ The discrepancy resulted in a scenario where for $1,000, the attacker could load up on $1.3 million in collateral and use it to borrow real assets that can be withdrawn.

FatMan went on to warn that the losses could be much higher once the stock markets opened earlier today. He explained:

So far, the mBTC, mETH, mDOT and mGLXY pools have been drained. In around 12 hours, the market feed will kick in, and the attacker will be able to drain all of the mAsset pools (such as mSPY and mAAPL, mAMZN, etc.) – most of the pools can still be saved.

[Do Kwon and the Mirror Protocol] Please look into fixing the LUNC price oracle, because in a short while, all liquidity pools will be drained, Mirror will accrue irremediable bad debt, and the system will collapse in on itself. This is not the time to be negligent.

The Mirror Protocol Also Suffered a $90M Exploit that Went Unnoticed for Seven Months.

The Mirror Protocol is a DApp designed to create synthetic assets called Mirrored Assets (mAssets) that track the price of real-world assets such as stocks and cryptocurrencies. The minting of mAssets is decentralized and initiated by users by opening a position and depositing collateral.
Terra’s Mirror Protocol recently made headlines for suffering a $90 million exploit last October. The attack went unnoticed for seven months only to be discovered a few days ago.
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John P. Njui
John is a journalist and writer with a vast crypto and blockchain industry background. He has been passionately writing and creating crypto content since 2017. When not immersed in the complex world of decentralized finance, John is often seen playing a chess game or running a marathon. He is a man of many talents.