Hacker’s Decoy

It turned out that the acute shortage of CRV tokens at the popular decentralized finance (DeFi) network, Aave, was the hacker’s attempt in exploiting Aave.

Lookonchain’s analysts claimed that the native stablecoin of Curve Finance namely CRV inflicted a vicious attack that caused short-selling of underlying tokens.

Analysts noted further that the hacker was identified to be associated with the notorious Avraham Eisenberg i.e. the exploiter of Mango Markets.

Artificial Shortage of Curve’s Stablecoin

This was so because the address used to cause the short-selling of CRV was reportedly connected with Avraham Eisenberg.

From that address, the exploiter initiated the first swap transaction on 13th November in which approximately 40 Million USDC were reportedly swapped.

These swapped USDCs then landed in the Aave network for borrowing CRV against USDC collateral for the purposes of onward selling of CRV.

Efforts in Causing Panic

As a result thereof, the underlying asset namely the CRV stablecoin saw its value decline to $0.464 from $ 0.625.

It has now been confirmed by blockchain data that the exploiter then initiated a second transaction.

In this transaction, the same address of ‘ponzishorter.eth’ was again used through which a further 30 Million CRV were swapped in two chunks.

According to an estimate, this time the hacker managed to secure a CRV worth more than Rs.14.85 Million as borrowing. These CRV tokens were then sent by the hacker into OKEx’s platform for executing further sales.

Forced Liquidation Crisis

According to Lookonchain’s analysts, the transactions were executed mainly for bringing down the value of CRV. The idea was to incite a sense of panic amongst CRV users in forcing them to deal with and tackle the liquidation crisis.

As a countermeasure, the founder of Curve was forced to inject an additional 20 million CRV as collateral.

Currently, the health factor pertaining to Aave’s wallets is 1.65. This literally indicates that against borrowed assets, the exploiter managed to create an excess in collateral.

Hacker’s Primary Target Was Aave

According to Arkham, an analytical firm for blockchain, the hacker initiated transactions as a decoy. The firm claimed that the hacker’s primary objective seems to be to target and exploit loopholes in the Aave network.

Arkham further claimed that in an effort to exploit Aave, Eisenberg had already developed a position on the targeted network.

It claimed that Eisenberg’s position comprised $100 Million approximately which Eisenberg was supposed to launch a highly complex trading scheme.

Vulnerability in Aave’s Looping System

In the past month, Aave indicated that its looping system was prone to vulnerability, hence, Eisenberg was obviously looking to exploit this vulnerability.

As a consequence, the liquidators in the Aave network would no longer be able to acquire the CRV tokens held by Eisenberg.

On the contrary, Aave would be forced to pull out massive tokes from its safety vault and sell them for making up for the loss of goods.