DeFi Protocol Linear Finance Suffers Liquidity Drain in LUSD Token Attack

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Attacker exploits system by minting unlimited LAAVE tokens, trading for LUSD on Linear Exchange.

September 21, 2023

Despite the security breach, Linear Finance’s total value locked stands at approximately $8 million, suggesting that the protocol has not been severely affected. However, the same cannot be said for its stablecoin. LUSD experienced a complete collapse in value due to the liquidity drain. The native token of the DeFi protocol, LINA, seems to have remained stable despite the attack.

The team has also disabled the Linear bridge contract for LUSD, thus cutting off the attacker’s potential future access. Thirdly, they have enlisted the expertise of an industry-leading security team to track down and bring the attacker to justice. Lastly, information about wallets involved in the exploit has been shared with major exchanges and relevant authorities.

Linear Finance, known for supporting cross-chain liquidity and synthetic asset trading, operates a collateralized debt pool that enables users to deposit collateral and mint LUSD, which is subsequently used for trading synthetic assets on the platform. The protocol’s governance is driven by the LINA token, which is utilized for voting and staking rewards. Linear Finance offers two primary tokens: LINA for governance and staking and LUSD, a stablecoin pegged to the US dollar that facilitates synthetic asset trading.

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