After 80 million USR exploits, Resolve stopped the protocol
Resolve Labs said on Sunday that an attacker issued 80 million unbacked tokens, knocking the dollar stable coin from its socket and briefly bringing the token down to $0.14, temporarily halting the protocol.
The Resolve Foundation team announced on X on Monday evening that all protocol functions, including the app, have been temporarily halted to “capture the impact of the exploit”, freezing the Season 4 airdrop claims, and resuming and withdrawing RESOLV tokens.
Resolve previously claimed that the holding pool remained unscathed, although onchain analysis showed that the attacker converted most of the USR to Ether (ETH) and sold it for $25 million. The USR is currently trading near $0.24, below the target dollar peg.
In an onchain ultimatum on Monday, Resolve offered the exploiter a white hat-style deal: return 90% of the converted funds (around $25 million in ETH) and the remaining USR within 72 hours, keep 10% as a bonus, and stop further activity or face consequences.
“Failure to comply within the specified time period will result in escalation,” said the last states, such as property closures combined with exchanges and bridges, public searches and law enforcement actions. There have been no activities on the main wallet since.
Michael Perl, vice president of GTM and strategy at Web3 security firm Cyberspace, told Cointelegraph that ransoms have been reopened only to legitimate pre-exploit holders, while Resolve and partners continue to monitor “bad USR” and prepare a full post-mortem.
Related: Balancer Labs Shuts Down 4 Months After $100M+ Exploitation, Protocol Continues
Resolv exploits stablecoin PTSD reigns
Beyond Resolve, the event took place in 2015. The 2022 collapse of the Terra ecosystem has rekindled the industry's unsolved damage, the death of the Terra USD (UST) algorithmic stablecoin with the loss of tens of billions of dollars in value, and changed regulatory and risk perceptions around stablecoins.
Perl said the USR depeg has “opened Pandora's box”, with roughly $180 million in liquidity on lending protocol Morpho and $334 million in liquidity from the lending and liquidity platform, but “limited overall” as nervous stable coin issuers revisit their view of the peg.
“We hear a lot of stablecoin platforms that are upset after this exploit,” he said and warned that decentralized finance (DeFi) is now heavily intertwined with stablecoins, that Perl protocols can sometimes take hacks and continue, a serious failure on the stablecoin layer could end the company, which USR's failure has now brought back into sharp focus.
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