JPMorgan assessed the consequences of the attack on the Curve Finance protocol
Date: 2023-08-05 Author: Karina Ziganova Categories: BLOCKCHAIN, IN WORLD
According to analysts at JPMorgan, the impact of the Curve Finance protocol attack on the decentralized finance (DeFi) ecosystem has been contained. It is reported by The Block.
“While the decline in the price of the CRV token has caused some contagion in DeFi platforms using CRV as collateral, the impact has so far been contained,” analysts at JPMorgan wrote.
What's happening with DeFi
However, in their opinion, DeFi growth has stalled over the past year due to several issues, including the collapse of Terra and FTX, regulatory action and uncertainty in the US, hacks, and higher transaction fees.
“This undermined investor confidence and led to an outflow of funds and the exit of DeFi users,” they said.
But according to analysts, some areas of DeFi are showing growth. We are talking about the Tron ecosystem and second-tier Ethereum networks, including Arbitrium and Optimism, whose total value locked (TVL) has increased over several months.
“The rise in their TVL could be due to them offering faster and cheaper transactions to users who would otherwise experience network congestion and higher transaction costs on Ethereum,” the analysts said.
Curve Finance attack
Curve Finance was hit by an exploit that crashed the price of its native CRV token and threatened the liquidation of more than $100 million in loans owned by protocol founder Mikhail Egorov.
He took out several loans on various DeFi lending platforms, where he used CRV as collateral and mostly received stablecoins. The liquidation of its large loans could put pressure on other DeFi protocols due to CRV's role as a trading pair in various liquidity pools.
The attack occurred on Curve Finance's four main liquidity pools due to a vulnerability in Vyper, a programming language widely used in DeFi applications. After that, Egorov liquidated his holdings in CRV to strengthen his credit position. In total, he sold 72 million CRVs at $0.4 per token, raising a total of $28.8 million.
