- Aave and Yearn Finance exploit leads to losses as glitch facilitated excess stablecoin minting.
- AAVE bulls prevail but their dominance might be short-lived as whales sell.
Aave users were hit with some concerning news on 13 April following reports of malicious exploit. Initial reports revealed that Aave and Yearn Finance were involved, leading to an alleged $10 million loss.
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Blockchain security and data analytics firm PeckShield was among the first to identify what happened. According to their report, they observed that a large amount of Yearn Finance’s stablecoin yUSDT was minted. This was roughly worth $1.25 million.
The malicious actor behind the exploit reportedly took advantage of yUSDT misconfiguration on Aave. An amount large enough to drain the funds in Yearn Finance.
It appears the root cause is due to the misconfigured yUSDT, which is exploited to mint huge yUSDT (1,252,660,242,212,927.5) from a small $10K USDT. The huge yUSDT is then cashed out by swapping to other stable coins. https://t.co/Qz3vwtbcot pic.twitter.com/xlsc2Nlmle
— PeckShield Inc. (@peckshield) April 13, 2023
The report led to concerns that the exploit might affect Aave particularly due to the large amount of yUSDT minted. The hacker would reportedly swap the yUSDT for USDT. Hence concerns that the exploit would lead to large losses.
Reports indicated that only $10 million worth of assets were stolen. Meanwhile the DeFi lending and staking protocol put stakeholders at ease after announcing that AAVE V1, V2 and V3 were not affected.
We are aware of this transaction, and it did not have an impact on Aave V2 and Aave V3.
We are now confirming whether there is any impact on Aave V1, the oldest version of the protocol which has been frozen. We’re monitoring the situation closely to ensure no further concerns. https://t.co/uM9wtLNJMl
— Aave (@AaveAave) April 13, 2023
AAVE shrugs off the exploit FUD
Hacking or exploit instances often trigger FUD in the investment landscape. However, this particular incident involving Aave and Yearn Finance did not have a notable impact especially on AAVE.
Interestingly, AAVE exchanged hands at $79.99 at the time of writing, which represented a 4% upside from its lowest price tag during the day.
Zooming out further revealed that AAVE delivered an overall bullish week so far. A retest of the $83 resistance could be expected, with a significant chance of a breakout if the improving market conditions prevail.
How many are 1,10,100 AAVEs worth today
On the other hand, an on-chain assessment revealed that the supply held by top addresses dropped substantially between 12 and 13 April. This could be considered as a confirmation that whales had trimmed their balances.
Source: Santiment
The above observation was also accompanied by a drop in the mean coin age. A confirmation that a large amount of coins held for a while were sold recently. Also, daily active addresses dropped at around the same time, hence low activity from the retail segment. The network growth metric demonstrated a similar outcome.
Source: Santiment
Furthermore, AAVE metrics leaned more in favor of a potential price drop. This hasn’t been the case despite whale outflows. These observations may suggest that there was still significant demand in the retail segment. However, it could be easier for the bears to exert pressure, potentially triggering a price drop.
