Venus’ governance token XVS plunges 9% over exploit-driven bad debt

Venus’ governance token (XVS) experienced a 9% price drop following an exploit on March 16th that resulted in $2.15 million in bad debt within the protocol. The price decline coincided with a broader sell-off in risk assets, as reflected in the CoinDesk 20 (CD20) index. The exploit involved an attacker accumulating a significant position in Thena’s THE token, funded by ETH withdrawn from Tornado Cash, and manipulating the vTHE contract to inflate the exchange rate. This allowed the attacker to borrow assets against inflated collateral and subsequently profit from the price drop after selling THE. While the protocol asserts no user funds were lost outside the affected pools, it has paused THE borrows and withdrawals, adjusted collateral values, and tightened rules on other at-risk markets. The attacker’s address had been previously flagged by the community, but Venus refrained from action due to the lack of concrete rule violations at the time, highlighting a common tension within decentralized finance (DeFi). Governance is now tasked with determining how to cover the loss through Venus’s risk fund.

(Source：CoinDesk)