Venus Protocol Faces Suspected Flash Loan Attack as $14 Million in THE Liquidates
According to Venus Protocol’s initial investigation, the protocol cut collateral factors to 0 in seven markets after abnormal activity in the THE pool, while borrowing and withdrawals for THE remain paused.
Fact Check
Summary
Venus Protocol said it reduced collateral factors to 0 across seven markets after detecting abnormal activity in the THE pool. In its initial investigation, the protocol said the attacker had accumulated about 12.2 million THE, roughly 84% of the token’s maximum supply, since June 2025. Venus had already paused borrowing and withdrawals for THE, while stating that other markets remain operational. The update adds new protocol-level mitigation measures to the earlier reports of a suspected exploit and liquidation cascade involving THE.
Terms & Concepts
- collateral factors: A risk parameter in lending protocols that determines how much users can borrow against deposited assets; setting it to 0 prevents an asset from being used as collateral.
- THE: The native token at the center of the Venus Protocol incident and related pool activity described in the update.
- bad debt: A deficit created when liquidated collateral is insufficient to fully repay outstanding loans, leaving losses for the lending protocol.