The loan contracted on Venus Protocol by the BNB Smart Chain hacker in the fall of 2022 is now on the verge of liquidation. Thus, collateral of approximately $200 million of BNB is at risk. Let’s take a closer look.
$150 million is set to be liquidated on Venus Protocol
Several months ago, in the fall of 2022, a hacker carried out an impressive theft on the BNB Smart Chain, leading to a loss of more than 2 million BNB for more than $560 million at the time. To counter this, the validators had operated controversial emergency measures, which notably involved the shutdown of the blockchain and a hard fork.
To carry out his mischief, the attacker had borrowed approximately $147.5 million worth of stablecoins on the Venus Protocol lending and borrowing app, which he had collateralized with nearly 935,000 BNB.
But now, in recent days, the ecosystem has experienced high volatility due to the regulatory crisis in the United States, and BNB has not been spared with a loss of almost 17% in the last 7 days alone. .
So, the hacker’s position is strongly degraded on Venus Protocoland according to data from DefiLlama, if the BNB were to fall below the bar of 220.067 dollars per unit, the liquidation of the more than 200 million dollars of collateral would begin to take place.
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A situation under control
With such amounts at stake, a liquidation could lead to a significant drop in BNB, triggering cascading liquidations, creating a vicious circle. To avoid this, a governance proposal had been opened in November 2022, so that this liquidation, if it were to occur, would be carried out manually in order to limit the impact on prices.
For this reason, an address had been whitelistedgiving exclusivity to the BNB Chain Central Team to carry out the liquidation in collaboration with “Binance and other players” if needed. This was again confirmed this morning:
According to the governance proposal below, the BNB Chain core will take over the $BNB position on Venus if the BNB price hits the liquidation threshold. https://t.co/MSUHLUTwTS
—BNB Chain (@BNBCHAIN) June 12, 2023
In view of this eventuality, the Venus Protocol teams indicated that the address in question had begun to be provisioned for the operation :
“The whitelisted wallet was initially funded with $30 million in USDT with the assurance of avoiding a shortfall on Venus and providing additional support through this Venus governance-approved mechanism. »
Thus, if the liquidation were to occur, it would take place without friction. Nevertheless, if it is done “for the good cause”, it once again highlights the strong centralization of the BNB Smart Chain ecosystem and its dependence on Binancewhile the main value of a blockchain is supposed to be immutability for better and for worse.
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Sources: DefiLlama, Venus Protocol
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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