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    Home»News»Nereus Finance Loses $371k in Avalanche Flash Loan Attack
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    Nereus Finance Loses $371k in Avalanche Flash Loan Attack

    Anietie DavidBy Anietie DavidSeptember 8, 2022Updated:September 8, 2022No Comments2 Mins Read
    Nereus Finance Loses $371k in Avalanche Flash Loan Attack
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    A scammer used a special smart contract on the Nereus Finance to deploy a $51 million flash loan to manipulate the AVAX/USDC Trader Joe LP pool pricing for a single block. The scammer made away with a net worth of $371,000 USD Coin (USDC). 

    Protocol for avalanche-based financing Nereus Finance was the victim of a devious attack in which a user obtained $371,000 in USD Coin (USDC) using a smart contract abuse.

    CertiK, a blockchain cybersecurity firm, was among the first to notice the vulnerability on Tuesday, noting that the assault had an impact on liquidity pools on Nereus related to decentralized exchange (DEX) Trader Joe and automated market maker Curve Finance. CertiK also claimed that the underlying protocols were disrupted. Curve Finance, on the other hand, commented on Twitter stating that assets were impacted, not protocols. 

    We are aware of a flash loan exploit on the AVAX/USDC Joe LP NXUSD market. This incident is isolated to a single collateral market and the NXUSD protocol as a whole remains over colateralised. We are executing a recovery process and will be publish a post-mortem shortly.

    — Nereus Finance🔺 (@nereusfinance) September 7, 2022

    Nereus Finance issued a thorough article about the event on Wednesday, revealing how the “exploiter” was able to install a custom smart contract that used a $51 million flash loan from Aave to artificially manipulate the Avalanche (AVAX)/USDC Trader Joe LP (JLP) pool price for a single block.

    As a consequence, the unidentified hacker was able to manufacture 998,000 units of Nereus’ native coin NXUSD against a collateral of $508,000. They subsequently transferred this cash into various assets via various liquidity pools, resulting in a net profit of $371,406 once the flash loan was repaid. The event resulted in the creation of $500,000 in the NXUSD protocol. 

    Nereus Finance to the Rescue 

    According to the Nereus team, they acted quickly to correct the problem. They liquidated and suspended the exploited JLP market after consulting security experts, devising a mitigating strategy, and contacting law enforcement. According to reports, the bad debt was paid off with NXUSD from the team’s treasury.

    The exploit, according to Nereus, was caused by a “missed step” in the pricing computation, resulting in the possibility of being abused. It did, however, emphasize that “no user money is at risk, and NXUSD remains over collateralized,” and that the “Lending and Borrowing protocol was not affected by this vulnerability.”

    Nereus is a non-custodial liquidity market protocol that allows users to engage as depositors or borrowers. Depositors supply liquidity to the market in order to earn a passive income, whilst borrowers might borrow over-collateralised (perpetually) or under-collateralized (one-block liquidity).

    Avalanche Blockchain Cryptocurrency Hack Exploits Nereus Finance
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    Anietie David

    Anietie has worked in the blockchain industry for three years, gaining experience in blockchain technology, cryptocurrencies, DeFi, and NFTs. As a seasoned content writer, he is passionate about creating effective content strategies for blockchain brands. In addition to content writing, he also has a strong interest in front-end development. When he's not working, he spends his time reading horror novels or playing CODM.

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