Zunami Protocol, a major player in the decentralized finance (DeFi) industry, has suffered a significant loss of over $2.1 million due to a security breach. The breach involved a flash loan hack that manipulated prices, resulting in the attacker making a profit of 1,152 ETH.

The attack targeted Zunami Protocol’s Curve Finance-hosted liquidity pool and was uncovered by blockchain security companies PeckShield and Ironblocks.

How the Hack Occurred

Zunami Protocol operates primarily through the “zStables” pool on the Curve network, providing decentralized exchange (DEX) services for stablecoins within the Ethereum ecosystem. The attacker initiated the hack by utilizing a flash loan from the “balancer,” injecting liquidity into the system to manipulate prices. The attacker then traded on the exchange with the newly created liquidity, manipulated the price again, and withdrew the funds, ultimately making a profit of 1,152 ETH.

Impact on Zunami Native Assets

The hack had a significant effect on the prices of Zunami’s native assets. The Zunami USD stablecoin (UZD) experienced a decline of over 98%, while the Zunami Ether (zETH) dropped by more than 85%, settling at $278.

Complicating matters further, the stolen funds were funneled through Tornado Cash, a controversial crypto-mixing service platform.

FAQs

What is Zunami Protocol?

Zunami Protocol is a decentralized finance (DeFi) platform that operates through the “zStables” pool on the Curve network. It provides decentralized exchange services for stablecoins within the Ethereum ecosystem.

What is a flash loan?

A flash loan is a type of loan in the cryptocurrency space that allows borrowers to take out and repay a loan within the same transaction. It enables users to execute complex trading strategies with borrowed funds without the need for collateral.

How did the hacker manipulate prices?

The hacker leveraged a flash loan to inject liquidity into the Zunami Protocol’s system. By doing so, they were able to manipulate the price of the platform’s assets. This manipulation allowed them to profit from trading on the exchange.

What are the native assets of Zunami Protocol?

Zunami Protocol has two native assets: Zunami USD stablecoin (UZD) and Zunami Ether (zETH).

What is Tornado Cash?

Tornado Cash is a crypto-mixing service platform that allows users to enhance privacy and anonymity when conducting transactions with cryptocurrencies.

Will Zunami Protocol recover from the hack?

It is uncertain whether Zunami Protocol will fully recover from the hack. The significant loss of funds and the impact on asset prices will likely have long-term consequences for the platform.

Summary

Zunami Protocol, a prominent player in the decentralized finance (DeFi) industry, has lost over $2.1 million in a hack that manipulated prices. The attacker used a flash loan to inject liquidity into the platform and subsequently made a profit of 1,152 ETH. The hack caused significant declines in the prices of Zunami’s native assets. The stolen funds were also funneled through a crypto-mixing service platform, adding complexity to the situation.