Nirvana, the Solana-based stablecoin, is reported to have suffered a flash loan attack, leading to a loss of close to $3.5 million. According to the on-chain blockchain analytics firm, PeckShieldAlert, the network’s native tokens, stablecoin, ANA, and NIRV, dropped 89% and 90%, respectively.
How the Flash Attack Happened
According to the on-chain data from PeckShieldAlert, the hacker utilized a $10 million loan in USD Coin (USDC) to mint ANA tokens worth the same amount. This shows how easy it is to use flash loans because users can borrow a huge amount of capital with low-interest rates.
However, this can only be possible if the loan is repaid on the same platform used to borrow the funds. The Solend Protocol is where the flash loan was processed and approved.
Moreover, the attacker managed to tamper with the protocols’ system by inflating the value of the tokens. Afterward, the attacker swapped the $10 million ANA tokens for $13.4 million worth of USDT coins.
Meanwhile, the consequence of the attacker’s action is telling as Nirvana’s balance sheet bled $3.49 million.
The initial $10 million loan was since repaid by the exploiter, who moved the assets to an Ethereum wallet via Wormhole. Subsequently, the hacker converted the stolen funds into DAI stablecoins to cover the trials of the fund’s movement.
ANA’s Slump: Liquidity to Blame
Analysts pointed out the absence of liquidity as one reason for the decline in the token’s value. The current price action is anticipated before the latest sink, although the network and its investors must decide on the best possible ways to address the declining floor price.
This is not a good time for most stablecoins as the Terra UST stablecoin crash has sent shock waves across the ecosystem. Stablecoins were initially seen as the most stable digital currencies, but a series of events exposed their vulnerability.
Decentralized finance (DeFi) platforms have recently become the target of flash loan attackers. In April, Beanstalk’s Ethereum stablecoin network was the target of a flash loan exploit. The platform lost $182 million in one of the biggest attacks on the crypto ecosystem.
Some weeks ago, the Tron stablecoin, USDD, was having a rough patch but is now performing admirably. Meanwhile, the Nirvana team is yet to issue a public statement regarding the latest exploit. Solend revealed that it is in touch with its counterpart at Nirvana and that no part of the protocol is affected by the attack.
The Nirvana algorithmic stablecoins are the first native token projects hosted on the Solana network. The token is a dual currency designed with liquidity managed by the protocol.
Furthermore, the Nirvana treasury provides floor price support for ANA with the liquidity ratio to boost ANA’s market performance.
The flexibility enables Nirvana to compute the stability and purchase demand of the network to achieve optimum floor prices during the trading session.
Overall, Nirvana looked promising before the recent fall, and a quick turnaround is likely to drive the token’s value up again.