LUNA storm extends to DeFi lending, Avalanche's Blizz announces closure, Binance Smart Chain's Venus loses nearly $15 million

The role of the Oracle in the blockchain is to provide market data under the blockchain to be used by smart contracts on the chain, serving as a crucial hub for the operation of DeFi finance. The plummeting price of LUNA also affected DeFi lending protocols. Due to the fact that the price information of LUNA supplied by the Chainlink Oracle has a lower limit of 0.1, some DeFi lending protocols were unable to react quickly during the rapid decline, causing the influx of cheap LUNA to be deemed at a much higher price than the market, leading to the lending out of other assets, resulting in insolvency and bad debts.

Among them, the lending protocol Blizz Finance of the public chain avalanche Avalanche announced its closure, and Venus on the Binance Chain also implemented emergency measures.

Review related news Buji DAO Bing: BNB Chain protocol Venus faces bad debts due to LUNA price information issues

Advertisement - Please scroll down for more content

Blizz Finance Announces Closure

Blizz Finance, a lesser-known lending protocol, has announced its closure due to insufficient team funds amidst the recent turmoil. They have stated that the abnormal price fluctuations of LUNA on 5/12 triggered Chainlink's lowest price circuit breaker mechanism. The oracle stopped updating, with the final price at $0.10. By the time they became aware of this issue, multiple addresses had exploited it and depleted all lendable assets. Although Chainlink attempted to alert about the oracle pause, they did not receive the message in time, nor did they find this mechanism in the pre-existing documentation.

Due to the protocol assets being drained, the team has declared a cessation of operations. The LUNA used as collateral in the protocol, valued at around $1.5 million, will be used to reimburse affected users.

Venus Halts Markets Urgently

Venus, the largest lending market on the Binance Smart Chain BNB Chain, faced a funding shortfall of approximately $14.2 million following the incident. The official announcement stated that they have collaborated with security teams and exchanges to freeze the manipulators' funds. The Venus team announced that they will fully compensate from the risk fund and have halted all market price feeds. During the protocol suspension, only asset supply and loan repayments are allowed to prevent mass liquidations.

Oracle Chainlink Has Not Publicly Addressed the Issue

As of the deadline, the oracle service provider Chainlink has not made any announcement regarding this issue on Twitter. Only some netizens have indicated that Chainlink has informed various protocols to make corrections upon discovery. However, Chainlink does have the capability to prevent external contracts from extracting prices. Venus also did not have real-time monitoring in place for price oversight.