- A $23 million hack on Resolv Labs on Sunday caused its USR stablecoin to depeg to $0.23.
- The fallout spread as traders used depegged USR to drain liquidity from a dozen DeFi yield vaults.
- Automated “risk curator” bots worsened the situation by allocating millions more into broken markets.
- Multiple lending protocols, including Fluid and Inverse Finance, suffered significant losses or bad debt.
A Sunday hack of Resolv Labs resulted in an unauthorized $80 million mint and a $23 million loss, causing widespread contagion across the decentralized finance sector. Opportunistic traders then used the depegged USR stablecoin, now trading at just $0.23 according to CoinMarketCap data, to borrow valuable assets, draining over a dozen yield vaults.
The attacker’s profits are estimated by blockchain security firm Beosin at 11,409 ETH, worth over $23 million at the time of writing. In a statement, Resolv confirmed the breach was due to a private key compromise leading to the unauthorized minting.
The situation was exacerbated by automated systems. Chaos Labs‘ Omer Goldberg explained how curators like Gauntlet and Re7 automatically allocated more capital to failing markets for hours after the hack. Consequently, bad debt piled up across several platforms.
Fluid accrued up to $17.5 million in bad debt, but its team reassured users that it secured loans for full coverage. Inverse Finance‘s stablecoin DOLA was indirectly exposed, with its team pledging to cover a $340,000 hole in a public statement.
The incident mirrors a similar contagion in November after a $93 million loss at Stream Finance. This latest hack underscores DeFi’s interconnected risks, where a single point of failure can trigger a damaging chain reaction across the ecosystem.
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