Venus Protocol, a smart contract platform on the Binance Smart Chain, facilitates asset supply and borrowing through vTokens contracts. Users can supply BNB or BEP-20 tokens to receive vTokens or borrow assets by providing collateral.
The protocol also supports the creation of VAI, a synthetic stablecoin intended to be pegged to the value of 1 USD. VAI is generated using the same collateral supplied to the protocol. The vToken contracts of Venus Protocol monitor these balances and dynamically determine interest rates for borrowers.
Venus Protocol, a decentralized lending platform in the BNB Chain ecosystem, is attracting widespread attention as a substantial Binance Coin (BNB) investment hangs in the balance, on the verge of potential liquidation.
This particular position is held by an entity that carried out a substantial and significant transaction. The hard fork of a blockchain upgrade implements major changes to the network’s software. The transaction was successfully completed at 4 a.m. ET on Wednesday, specifically at block height 22,107,423.
The primary purpose of this transaction was to apply a software patch that effectively addressed a critical vulnerability that had been exploited by an unidentified attacker. The attacker had illicitly acquired over $100 million from the BNB Chain’s cross-chain bridge the previous Friday.
Utilizing the pilfered BNB, the perpetrator took advantage of the Venus Protocol to secure a loan of stablecoins valued at $150 million. This was achieved by leveraging a substantial position of 900,000 BNB (equivalent to around $210 million). It’s important to note that this position has remained unchanged since the security breach occurred.
Due to the downward trajectory of cryptocurrency prices over the past year, the health rate of this substantial loan position has significantly declined, reaching a precarious level of approximately 1.03. This places it dangerously close to the point of liquidation. If the price of BNB were to decrease from its current value of $231 to $220, it could initiate the liquidation process for this position.
As confirmed in a recent tweet, the BNB Chain core team has reaffirmed their commitment to assuming control of the position if it reaches the liquidation threshold.
To safeguard against potential insufficiency on the Venus platform caused by the declining value of BNB, a whitelisted wallet was established with an initial allocation of $30 million in USDT. The intention was to offer supplementary assistance through an approved mechanism governed by Venus. This proactive action was taken to mitigate any adverse effects stemming from the decreasing price of BNB on the Venus ecosystem.
