Stablecoin UZD dips 99% following Zunami Protocol hack

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Written on Aug 14, 2023

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Hackers attacked the DeFi platform Zunami Protocol on August 13.
The project suffered losses of around $2.1 million.
Stablecoin Zunami USD has plummeted severely to $0.0098.

Blockchain security company PeckShield detected an attack on the decentralized finance (DeFi) project Zunami Protocol on August 13. The hackers stole over $2.1 million from Zunami’s Curve Pools through price manipulation.

Hi @ZunamiProtocol Today's hack leads to >$2.1m loss and there are two hack txs involved:
– tx1: https://t.co/jsOmPT62mk
– tx2: https://t.co/u7YOvoS0R9

It is a price manipulation issue, which can be exploited by donation to incorrectly calculate the price as shown in the… https://t.co/yqwMVy0pCA pic.twitter.com/OfrDni7KtE

— PeckShield Inc. (@peckshield) August 14, 2023

The perpetrator offered a flash loan before adding liquidity to execute some trades (at inflated costs). Afterward, he returned the borrowed cash and withdrew profits of over $2 million.

The attacker drained Zunami’s zStables on Curve Finance (CRV)and manipulated Zunami USD (UZD) and Zunami Ether (zETH) prices. That saw the former losing its peg, a crucial development for so-called stablecoins.

1 UZD traded at $0.0098 at press time, following a significant 99% plunge.

PeckShield alerted Zunami about the incident on August 13. The DeFi platform confirmed the attack and advised customers to stop buying affected assets (stabelecoin UZD & zETH). While the team investigates the episode, they revealed that the hack did not affect collateral.

The crypto community points out Zunami’s false claims

well that was a lie???????????????????????? pic.twitter.com/DPLm0P0HtF

— Degem Finder (@degemfinder) August 14, 2023

The cryptocurrency community has slammed Zunami Protocol for its claims about top-notch de-peg prevention mechanisms. The platform promises proof of reserves that can help mitigate de-pegging risks. However, stablecoin UZD has endured a relentless plunge that saw it using its dollar tie.

DeFi security challenges

The recent attack on Zunami represents a series of hacking on DeFi protocols, exposing security weaknesses on decentralized finance platforms. Curve pools lost approximately $61M in crypto following July 30 attack.

Curve Finance showed efforts to unmask the perpetrator, even announcing a $1.85 million public bounty. Nonetheless, hackers seem ahead in exploiting DeFi’s security weaknesses.

Meanwhile, these incidents show how crucial vigorous security measures are in the DeFi market.