Decentralized finance platform Zunami Protocol has become the latest protocol to be hacked after confirming on Sunday that bad actors hacked its liquidity pool on Curve. 

The exploit led to the protocol losing over $2.1 million, according to estimates from blockchain security firm PeckShield and Ironblocks. 

Details Of The Hack 

The protocol confirmed the hack on Sunday, with security firm PeckShield confirming it as well. The protocol advised users to refrain from purchasing any of its Zunami Ether (zETH) or Zunami USD (UZD) stablecoins following the attack. The protocol further added that collateral remained secure and it was investigating the cause of the exploit. 

“It appears that zStables have encountered an attack. The collateral remain secure, we delve into the ongoing investigation. Please do not buy zETH and UZD at the moment; their emission has been attacked.”

Blockchain security firm PeckShield, in an analysis of the attack, estimated that around $2.1 million was stolen from the decentralized finance protocol’s Curve pool and put the exploit down to a price manipulation issue. 

“Hi @ZunamiProtocol Today’s hack leads to >$2.1m loss, and there are two hack txs involved: - tx1:https://etherscan.io/tx/0x2aec4fdb2a09ad4269a410f2c770737626fb62c54e0fa8ac25e8582d4b690cca - tx2:https://etherscan.io/tx/0x0788ba222970c7c68a738b0e08fb197e669e61f9b226ceec4cab9b85abe8cceb It is a price manipulation issue, which can be exploited by donation to incorrectly calculate the price as shown in the following figures.”

Fellow security firm Ironblocks also conducted an analysis of the hack, coming to the same conclusion as PeckShield regarding the cause of the hack. In its analysis, Ironblocks explained, 

“The attacker took [a] flash loan from [the] balancer, then he added liquidity so he [would] be able to change the price significantly and started to trade in Zunami’s exchange. Then he removed the liquidity and changed the price, then he traded back and [returned] the flash loan and got 1,152 ETH to himself. Classic price manipulation.”

Price Of Zunami USD And Zunami ETH Collapses  

The price of both the Zunami USD stablecoin and Zunami ETH (zETH) fell off a cliff following the exploit. The stablecoin lost its entire value, dropping 99%, while zETH dropped over 88%, dropping to $206. PeckShield also confirmed that the stolen funds had already been put through the controversial coin mixer Tornado Cash. 

Curve’s Recent Troubles 

The Zunami protocol is a yield farming aggregator for stablecoins and maintains its primary zStable pools on Curve. The protocol is managed as a decentralized autonomous organization (DAO) and promises users the “highest API on the market.” It has also stated that it has over $5 million in total value locked (TVL) on its website. According to Zunami, users can use the protocol to diversify their stablecoin portfolio and avoid the risk of crashing one of them. 

Curve Finance has faced multiple attacks over the past few weeks, impacting multiple decentralized finance protocols. Attackers managed to steal over $24 million worth of crypto by leveraging a vulnerability in the liquidity pools on Curve. The vulnerability was eventually traced back to Vyper, a third-party programming language being used to program Ethereum smart contracts on the protocol. At the time, Curve stated that liquidity pools not using Vyper were not impacted. 

“A number of stablepools (alETH/msETH/pETH) using Vyper 0.2.15 have been exploited as a result of a malfunctioning reentrancy lock. We are assessing the situation and will update the community as things develop. Other pools are safe.”

The exploit put major protocols at risk, especially due to Curve founder Michael Egorov’s $168 million lending position, which was at risk of liquidation.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

PayPal, which recently launched its stablecoin, just announced they’re rolling out a new feature that will allow users to seamlessly convert PYUSD and other crypto assets. The payments giant just launched a Cryptocurrency Hub service that will allow for the sale and purchase of crypto and other functionalities through PayPal and PYUSD. 

Introducing The Cryptocurrency Hub

PayPal has been exploring the possibility of expanding its cryptocurrency operations in the hopes of gaining a foothold in the rapidly expanding sector of cryptocurrencies as a form of payment. 

PYUSD, the company’s very own dollar-backed stablecoin, was released recently, making the company the first big US financial institution to launch a stablecoin. PYUSD, which lives on the Ethereum blockchain, is issued by Paxos and is 100% backed by U.S. dollar deposits like other stablecoins. 

Following the PYUSD launch, the company has updated its terms and conditions to introduce Cryptocurrencies Hub. According to the terms and conditions, the cryptocurrency hub feature will allow users to hold and interact with Bitcoin and other cryptocurrencies in their PayPal account. 

Users will be able to buy and sell crypto, and the hub also looks to simplify the conversion between PYUSD and other assets and make payments through PayPal after selling cryptocurrencies easier.  

The cryptocurrency hub will be directly linked to the user’s PayPal account and will show users the amount of each type of crypto asset they own and the US dollar equivalent value of those crypto assets. However, not all PayPal users will be able to access this new crypto feature right away. According to the update, users with good records with their balance accounts have a higher priority.

“You can only use your Cryptocurrencies Hub as part of your Balance Account by accessing it through your personal PayPal account. If you are a Hawaii resident, we will not allow you to establish a Cryptocurrencies Hub at this time,” the terms and conditions read.

PayPal And PYUSD

For PayPal, this is a big move into the world of digital assets and blockchain. They’re betting mainstream customers will adopt stablecoins as a legitimate way to make payments. If it catches on, PYUSD could transform the Ethereum blockchain and how many traditional investors relate to cryptocurrencies. 

Like every other stablecoin, PYUSD will be available on crypto exchanges. Crypto exchange Huobi has already announced that it will be the first to support PYUSD, as it launches the PYUSD/USDT trading pair. 

However, due to the popularity of PayPal, the launch of PYUSD seems to have raised concerns from some investors and regulators. According to Patrick T. McHenry, Chair of the House Financial Services Committee, the launch of PYUSD shows the need to pass clear regulations concerning the regulation of stablecoins.