Blizz Finance, an Avalanche-based liquidity protocol, and Venus Protocol have been hit significantly by the endless freefall of Terra (LUNA). Both DeFi protocols were affected by the price discrepancy as the Chainlink (LINK) price feed for LUNA was suspended due to extreme market conditions.
Blizz Finance reported that attackers were able to deposit millions of LUNA to borrow all the collateral. The price of LUNA was stuck at $0.10 when the protocol was hit. Blizz Finance was drained before it could pause due to the timelock. Its team tweeted that they have built on the AVAX ecosystem in good faith with the expectation that @chainlink oracles would behave as expected.
Venus Protocol highlighted that when Chainlink paused the LUNA price feed, the token’s price on their platform was at $0.107 when the market rate was $0.01. Owing to the price suspension, Venus Protocol lost $11.2 million. The platform will use its risk fund to overcome the shortfall.
The two platforms’ losses of millions is attributed to the suspension of Chainlink price feeds. However, some believe the protocols are to be blamed for their negligence. TheSoftwareJedi, a Twitter user, highlighted that Chainlink feeds have the necessary tools to avoid the problem. It blamed the DeFi protocols for not utilizing it.
The Terra blockchain was stopped when its token plunged by more than 99%. Terraform Labs said the blockchain network was discontinued in an effort to prevent governance attacks. But the network was restarted almost immediately.
Furthermore, crypto exchange Binance has delisted the LUNA/USDT pair as a precautionary measure. The platform announced that it will delist the pair if the LUNA price falls below 0.005 USDT.
