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Luna Classic Pricing Error Leads to Mirror Protocol Exploit

On the synthetic assets decentralised finance (DeFi) platform Mirror Protocol, a discrepancy in the reported price of underlying assets has resulted in an ongoing attack that has the ability to drain all of its cash. Mirror user, a governance participant on the Protocol forum, discovered the attack on Sunday. As of this writing, the synthetic asset pools Mirror BTC (mBTC), Mirror Polkadot (mDOT), Mirror Ether (mETH), and Mirror Galaxy (mGLXY) using the Protocol have lost nearly all of their assets worth over $2 million.

On the Terra and Terra Classic layer-1 blockchains, as well as BNB Chain and Ethereum, trading of synthetic assets such as stocks and cryptocurrency is possible. The exploit was made feasible via a price issue in Luna Classic (LUNC). Even if their real market values varied dramatically according to CoinGecko, the remaining validators on Terra Classic indicated that the price of LUNC at $0.000122 was the same as the freshly minted Terra (LUNA) ($9.32).

In May, both Venus Protocol and Blizz Finance were victims of a similar attack when the price of oracle Chainlink’s stated LUNA price stayed at $0.10 while the market price dropped dramatically. Blizz Finance was completely depleted, while Venus suffered an $11.2 million loss. The Mirror vulnerability will infect the other “m” asset pools by roughly 8:00 a.m. UTC on Tuesday, according to Terra community whistleblower FatMan on Twitter. The account further states that if the developers act to solve the flaw, most of the pools can be preserved.

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