Arman Shirinyan
The mirror platform was only minutes away from a cataclysm caused by Luna collateral
Mirror Protocol is a synthetic protocol for on-chain price exposure to real-world assets with millions of dollars in total locked and it was recently hacked because of the price oracle bug that saw the price of Luna Classic as over 5 UST.
Due to an incorrect calculation, hackers can easily get $1.3 million in collateral with just $1,000 worth of Luna, while the real value is significantly lower. Despite a low collateral price, traders can still easily borrow and withdraw real funds without worrying about their cheap collateral.
Crisis averted – Mirror timely disabled the use of mBTC, mETH, mGLXY and mDOT as collateral. The attacker can no longer use their ill-gotten gains to drain the rest of the pools. Great job @mirror_protocol – thanks! https://t.co/o64SVIRBmZ
— FatMan (@FatManTerra) May 31, 2022
In this case, the hacker drained mBTC, mETH, and two other pools. Twelve hours after the first drain, the hacker attacked other assets. Terra community members asked Do Kwon to fix the LUNA price oracle as it can result in draining all liquidity pools on Mirror and causing a system crash.
The whole situation jeopardizes the whole idea of a decentralized synthetic asset market, as exploits like this will cause disasters in the future as platforms like Mirror grow to the level of your average US broker.
To sue
Thanks to the developers’ dedication, Mirror was saved by ceasing mBTC, mETH, mGLXY, and mDOT usage as collateral, severely curbing the hacker’s intent to drain remaining pools. If developers started the block 15 minutes later, hackers would gain access to remaining pools, which would lead to the end of the platform.
If the fix was not rolled out in a timely manner, an attacker could easily have used the depleted funds as collateral and then put away even more funds, triggering a death spiral of borrowing with millions worth of collateral starting from just $1,000 in Classic Luna tokens come.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.