After DeFi Lost $100 Million to Flash Loan Attacks, Curve Pushes Chainlink

In the letter

  • Curve Finance recommends Chainlink as a decentralized pricing oracle.
  • This, after some projects misused Curve as an award oracle, led to attacks.
  • Chainlink claims it can prevent some of these attacks.

Editor’s Note: This article has been updated with comments from Chgelink’s co-founder Sergey Nazarov. It is made clear that the curve was not to blame.

After the DeFi logs lost $ 100 million in damage in a series of flash credit attacks, in part due to the misuse of technology by the Curve Finance decentralized exchange, Curve today recommended that the decentralized financing Protocols based on its services are integrated Chain link, a decentralized one oracle Network instead.

The recommendation comes after multiple attacks where hackers took out flash loans (immediately Crypto Loan) DeFi Loan logs for brief manipulation of curve liquidity pools that several DeFi projects had used as award oracle.

Attackers were able to do this because certain DeFi protocols relied on Curve’s own calculations about the price of the crypto held in the liquidity pools.

Recent attacks that have used flash loans to manipulate the price of stablecoins under the DeFi protocols include yesterday’s attack on the DeFi loan protocol connectionresulting in a loss of $ 89 million; an attack on Harvest finance that cost $ 34 million; one on Cheese bank that caused $ 3.3 million in damage; a $ 2 million attack on acropolis and a $ 6 million attack on DeFi value.

Sergey Nazarov, the co-founder of Chainlink, said Decrypt that the problem is not with Curve, but with the misuse of Curve technology by DeFi projects that are rushing to get their products online.

These projects “misused” pools of liquidity as pricing oracles, Nazarov said – something that “shouldn’t be used as pricing oracles”. Nazarov likened it to trying “a hammer as a screwdriver”.

Nazarov said these projects used Curve’s liquidity pools as an award oracle, in part due to the fast pace at which they created these logs. “It was a quicker solution to their need for an award oracle,” he said, “and maybe they didn’t expect that they would gain so much value so quickly.”

The curve is the sixth largest DeFi protocol. Investors have locked cryptocurrencies worth $ 882 million in their vaults. according to DeFi Pulse.

In a blog post, Curve recommended that the DeFi Protocols “do not use Curve as an award oracle” – the term for their system that determines the price of stablecoins, and instead rely on “a reliable award oracle that gives an accurate picture of the global market returns price of the asset in a liquidity pool. “

In particular, Curve recommends that DeFi protocols use Chainlink Price Feeds to “eliminate the risk of flash credit attacks”.

Chainlink is a decentralized oracle that distributes the calculation of stable coin prices to a network of nodes. This means that price feeds cannot be easily tampered with by flash credit attacks.

“This confirms what we have been saying all along: using a DEX as the central award oracle is not a sufficient way to protect against oracle exploits and attacks,” said Johann Eid, Product Manager at Chainlink Labs Decrypt.

“Oracle must be exposed to full market coverage and decentralization at both the Oracle node level and the data source level,” he added.

Some DeFi protocols already use Chainlink. DeFi credit protocol Aave uses it, and yearn.finance, a kind of DeFi robo-advisor, uses its oracles to rebalance vaults.

Chainlink’s price is currently $ 12.22. It’s down 4% in the past 24 hours, in line with the decline of the entire crypto economy.