Terra's Mirror Protocol was exploited by an attacker but managed to avert the worst-case scenario of having all its funds drained.
Mirror Protocol, a DeFi money market on Terra, was exploited for more than $2 million yesterday.
The exploit was caused by a glitch in the oracle price. Validators on Terra Classic were reporting the Luna Classic (LUNC) price instead of the LUNA price, which obviously differs significantly. Mirror Protocol allows the trading of synthetic cryptocurrencies and stocks. Its Mirror BTC (mBTC), Mirror Polkadot (mDOT), Mirror Ether (mETH) and Mirror Galaxy (mGLXY) synthetic asset pools were attacked and drained for over $2 million.
Luckily, though, the pricing error was fixed, and the worst case for Mirror was avoided.
As FatMan, a Terra community whistleblower on Twitter reported, Mirror was at risk of losing even more funds from its other synthetic asset pools if the pricing error had not been fixed. Luckily, the team managed to take appropriate measures with only minutes to spare.
FatMan also explained that a previous bug in Mirror's code allowed the protocol to be exploited hundreds of times since 2021. In total, this had amounted to a loss of over $30 million for the protocol, which did not notice the exploit until May 2022.
Mirror's exploit will not help the cause of Terra, which is trying to generate positive momentum for the re-launch of its forked blockchain. The price of MIR
reflected the loss of trust by the market and is down more than 10% over the last 24 hours.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap. CoinMarketCap is not responsible for the success or authenticity of any project, we aim to act as a neutral informational resource for end-users.