Curve Hack and Chainlink Saved DeFi | Crypto Daily Digest July. 31

TI Research

$CRV dropped as low as $0.08 on Uniswap, but fortunately, Chainlink did not use that price for its price feed, thus preventing numerous other DeFi projects from facing liquidation

Curve and several other protocols were exploited due to a bug in specific versions of Vyper, a language used to code smart contracts. The liquidity pools for alETH, msETH, and pETH fell victim to the exploit, resulting in losses exceeding $50 million. As a consequence, Curve's Total Value Locked (TVL) decreased by almost 50%, reaching $1.7 billion.

The native token $CRV also experienced significant losses, dropping by over 12%. At one point of time, the price of the CRV/WETH pair on Uniswap plummeted to nearly 0, reaching as low as around $0.08. Fortunately, this price was not used as a reference by the Chainlink oracle for other DeFi protocols. Instead, Chainlink quoted the lowest price at that time, which was $0.59. This crucial distinction saved numerous other DeFi lending protocols from cascade liquidation.

Chainlink's feed price is determined by a weighted quote of Centralized Exchange (CEX) price and Decentralized Exchange (DEX) price. Since Uniswap's CRV liquidity pool is relatively small, the Chainlink quote did not rely on the Uniswap price, providing a safeguard against potential disruptions in the DeFi ecosystem.

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