Venus Protocol hit by $3.7M exploit using illiquid token

Venus Protocol lost $3.7M after an attacker used illiquid THE tokens as collateral, manipulated prices, and borrowed assets. The platform paused THE-related operations and is investigating.

Venus Protocol, a decentralized lending platform on BNB Chain, suffered a major exploit involving the low-liquidity Thena (THE) token. The attacker accumulated large amounts of THE over several months and used it as collateral to borrow assets, including 20 BTC, 1.5 million CAKE, and 200 BNB, extracting over $3.7 million from the protocol. The exploit bypassed supply caps and artificially inflated THE's price through repeated cycles of borrowing and purchasing. This manipulation caused THE's price to spike from $0.27 to nearly $5, before dropping over 17% within 24 hours. As a result, Venus Protocol was left with approximately $2.15 million in bad debt. In response, the platform paused borrowing and withdrawals for THE and other low-liquidity markets while investigating the incident. This attack highlights the risks of accepting illiquid tokens as collateral in DeFi lending protocols.