Venus Protocol Faces Binance Coin (BNB) Liquidation Risk

Venus Protocol faces BNB liquidation risk as exploiter's collateral faces vulnerability amid falling BNB price, underscoring security issues.
By Coingape Staff
August 21, 2023 Updated August 21, 2023
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In recent developments, the Venus community’s vigilance has been rekindled as the health of the exploiter’s address involved in the notorious BNB Chain Bridge hack inches closer to the brink of liquidation. According to data from PeckShield, the health rate of the BNB Bridge exploiter on Venus stands at a precarious 0.99. As the price of BNB plummets to $207.9, concerns about further price decline amplify the vulnerability of this address.

BNB Bridge Attacker Health Falls Below 1

The Venus community, having previously encountered such situations, had successfully navigated a similar challenge by passing a governance proposal to whitelist the liquidation of the BNB Bridge exploiter’s position. The current scenario resonates with history, as the health of the exploiter’s address (0x48…9bec) dips below 1 once again, triggering the risk of liquidation. This address bears 784,616.10 BNB in collateral and holds a substantial debt position of 124 million USDT+USDC.

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The BNB Bridge hack in October 2022, which established itself as one of the most major exploits in crypto and DeFi history and netted over $593 million in BNB, set the stage for this dire situation. The hacker used 900,000 BNB worth $200 million on Venus as collateral to borrow stablecoins worth $150 million in the aftermath in an attempt to launder illicit proceeds.

Despite this incident, the Venus protocol continues to be a strong force in the DeFi ecosystem. It now ranks as the second-largest DeFi protocol on the Binance Smart Chain and has over $600 million in total value locked (TVL).

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BNB Price Continues Downfall, High Risk Of Liquidation

In light of this complex story, the Binance Coin price has fallen below $220 and is currently trading at $208.89, representing a decline of almost 4% over the last week. The possible effects of BNB’s continued price decrease and the upcoming liquidation of the exploiter’s collateral come into focus as the scenario develops.

BNB Chart

This example exemplifies the complicated interconnections between numerous smart contract networks with varying degrees of centralization. As a preventative strategy, BNB Chain’s proactive approach to resolving vulnerabilities helps to mitigate the effects of a future liquidation crisis. This situation emphasizes the difficult balance between security and market volatility as the DeFi landscape changes, necessitating risk management strategies to be re-evaluated.

Also Read: BTC Price Dips Target $20k, Last Opportunity Before the Bull Run?

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