Avalanche is one of the best-performing tokens ahead of the new week, posting 11.67% gains over the past seven days alongside Bitcoin and leading altcoin Ether.
The network’s native token is enjoying an impressive rally despite a recent flash lending exploit in an Avalanche-based lending protocol and false accusations designed to paint Ava Labs in a bad light. Its decentralized finance (DeFi) ecosystem and on-chain metrics such as daily transactions are not particular indicators of a healthy ecosystem. Nonetheless, AVAX token has had continued positive momentum since falling below $18 last Wednesday.
Optimistic for a run-up to fresh mid-August highs?
The 7-day trading chart for AVAX shows the token posting 16.46% gains over the period. The recent upward trend has been aided by the network’s developments and partnerships. Building on the boost, the Avalanche ecosystem has hit several milestones so far in September.
AVAX/USD trading chart
Avalanche on Saturday (September 10) announced the listing of its AVAX token on the Japanese subsidiary of leading exchange FTX. FTX Japan now allows its users to trade AVAX (against JPY and USD pairs), increasing the token’s presence on the global stage. Last Tuesday (September 6th), data visualization platform Bubblemap announced a partnership with Avalanche to help the latter deliver a faster and more streamlined Web3 experience.
While these developments may inspire some confidence in a bullish outlook, its on-chain metrics suggest the altcoin lacks the power to motivate an uptrend towards the mid-August highs. Also, AVAX social volume is declining as interest in Avalanche’s protocols wanes.
Market analysts have also observed exhaustion in the price rally, which saw the altcoin immediately tip over to the $20 resistance late last week. However, AVAX is still at risk of a retracement from current levels, which could result in a nosedive as sellers force buyers out of the driver’s seat.
Nereus Finance flash loan exploit update
Lending protocol Nereus Finance suffered a smart contract exploit last Wednesday (September 7) that left the attacker(s) with USDC worth $371,000. They targeted a vulnerability in the Avalanche-based protocol to manipulate AVAX/USDC trader Joe LP NXUSD market. The exploit was first identified by blockchain cybersecurity firm CertiK and later confirmed by Nereus Finance.
A detailed autopsy prepared by the team revealed that by manipulating the AVAX/USDC trader Joe LP pool price for a single block, the exploiter(s) were able to mint 998,000 NXUSD against $508,000 worth of collateral. After swapping this capital for various assets across multiple liquidity pools, they were able to make a net gain of $371,406 after repaying the flash loan. Nereus Finance reported that it recognized the issues and responded quickly by seeking advice from security experts, developing a risk mitigation strategy and informing the legal authorities.
The team also stopped and liquidated the exploited JLP market. Nereus Finance used NXUSD from its treasury to pay off the bad debt it was burdened with as a result of the $500,000 creation of NXUSD. The incident resulted from a missed step in the pricing that initially created the opening. Despite this vulnerability, the loan and borrow mechanism was not affected, according to the team. Nereus Finance is pursuing the exploiter but is offering a 20% white hat reward (no questions asked) for returning the funds. To prevent another exploit incident in the future, the team said it will change its audit and security policies.
Ethereum Core developers averted Avalanche’s $24 billion market cap erosion
In another incident, Ethereum developer Péter Szilágyi revealed over the weekend that he helped patch a vulnerability on the Avalanche blockchain sometime towards the end of March that would have effectively washed away a $24 billion market cap at the time. In a report shared on GitHub, the developer explained how his interest in how the Avalanche network led him to discover a critical flaw in packet processing on March 29. Szilágyi also stated that he informed the Avalanche team about the vulnerability. It was fixed the same day and the patch provided as part of the Avalanchego v1.7.9 upgrade was released the next day.
To learn more about Avalanche, read our Investing in Avalanche guide.
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