Top cryptocurrency news: Solana-based stablecoin NIRV
The crash of NIRV after the hack on Nirvana Finance’s
NIRV, a Solana-based algorithmic stablecoin, has become the latest stablecoin to crash, falling 85 percent from its dollar peg following a hack on Nirvana Finance's adaptive yield protocol on Wednesday.
The flash loan attack, which also caused Nirvana Finance's native token ANA to decrease by 85 percent, resulted in the loss of $3.49 million in Tether (USDT), with the SolanaFM team being the first to disclose that the funds were drained via a flash loan attack on July 27.
At the time of writing, NIRV and ANA were down about 85% to $0.13 and $1.21, respectively. The protocol was deliberately hacked, and reserve funds were stolen, according to Nirvana's website. NIRV and ANA have lost their collateral and have no market value secured.
The Nirvana team is now giving the hacker a $300,000 whitehat bounty and the termination of the probe into their identification. So far, the team revealed that the hacker's wallet, which is linked to a centralized exchange, has been identified.
"Please accept our request in good faith and restore our treasure for the benefit of the whole Nirvana community. You have not taken money from VCs or large funds—the funds you have stolen reflect the collective dreams of everyday people," it wrote.
Another algo bites the dust
The protocol describes the algorithmically collateralized NIRV as a "superstable" token. The asset is backed by a network of stablecoins in Nirvana's reserves via a "decentralized peg delegation," according to an explanation post on Solana Forums.
“From the protocol's perspective, NIRV is always viewed as $1. This monetary value is expressed in ANA tokens. For example, if the current price of ANA is $12, the protocol will take 12 NIRV in exchange for an ANA token.”
In this case, it appears that NIRV was depegged as a direct result of the stealing of $3.49 million USDT from Nirvana's coffers. In 2022, it is yet another algo-stablecoin that has been badly depegged. After being hacked for $182 million in April, Beanstalk Farm's algorithmic stablecoin is now worth $0.0022.
How it worked
According to a blockchain audit platform, a hacker deployed a software to artificially raise the price of ANA from $8 to $24 via the flash loan. They were then able to mint ANA against the flash loan at the inflated price, and then trade the asset for $3.49 million in USDT, which was immediately emptied from Nirvana's treasury.
It highlighted similarities between this hack and the $10 million assault on Crema Finance earlier this month, in which the attacker used a flash loan from the Solend decentralized finance (DeFi) protocol to falsify pricing data and raid the network.
SolanaFM further stated that the hacker ended the attack by turning "the entire USDT value into USDCET and putting the funds into an ETH account" via Wormhole's cross-chain bridge.
