Following a $3.5 million hacker attack, Solana-based stablecoin $NIRV and its native token $ANA dropped to ~85% of their original price.
On Wednesday, There was a flash loan attack on the algorithmic stablecoin that dropped 85% of its USD peg. The hack was launched to take out the adaptive yield protocol Nirvana Finance. The attack also caused Nirvana Finance’s native token, $ANA, to drop to 85%, which caused a loss of $3.5 million worth of USDT (Tether).
It was the SolanaFM team that first confirmed this attack – it comes out that the hacker borrowed funds via a flash loan attack.
“Utilizing Soleld Protocol’s Flash Loans, the hacker borrowed $10M USDC from the Solend Main Pool Vault, which was used to exploit $3.49M USDT from the Nirvana Finance Treasury.”
$NIRV now sits at $0.14 while $ANA is down to $1.33 (-85% from their original price). Nirvana’s Official website states that the funds were stolen as the protocol was “maliciously hacked.” They also mentioned that both these currencies have “lost their collateral and do not have secured market value.”
As most “decentralized” and “algorithmic collateralized” stablecoins are supposed to be “superstable,” $NIRV has ironically been compromised and now losing its value – it wasn’t supposed to do that.
According to a thread on the Solana forums, the stablecoin was backed by a network of stablecoins in the company’s reserves via a “decentralized peg delegation.”
“NIRV is always treated as $1 from the protocol’s point-of-view. This dollar value is denominated in ANA tokens. For instance, if the spot price of ANA is $12, the Protocol accepts 12 NIRV to purchase an ANA token.”
So, the stablecoin was supposed to be stable but couldn’t hold its peg. The depeg, apparently, is a result of $3.5M worth of USDT being stolen from the reserves.
As we know now, Nirvana isn’t the first algorithm-based stablecoin to be depegged in the crypto market.
Have you heard about Beanstalk Farm’s algorithmic stablecoin that’s worth around $0.0022? Well, the protocol was hacked in April – they stole $182 million.
Another algorithmic stablecoin TerraUSD Classic (USTC), lost its peg, resulting in $40 billion vanishing from the market.