Venus Protocol, a decentralized lending platform on Binance Smart Chain, has announced its readiness to liquidate a large BNB position belonging to a hacker potentially.
The protocol said that if the BNB falls below $220, the Binance Chain core team will take over the position without affecting the protocol or its users.
The hacker’s BNB position dates back to October 2021, when an entity exploited a vulnerability in the Binance Chain cross-chain bridge and stole an estimated $120 to $150 million worth of crypto assets, including 900,000 BNB (worth about $210 million at the time).
The hacker then used the stolen BNB to borrow $150 million in stablecoins from Venus Protocol. This DeFi platform allows users to lend and borrow crypto assets and earn interest.
Since then, the hacker’s position has remained open on Venus Protocol, but its health factor has deteriorated due to the declining BNB price.
The health factor measures the liquidation risk of a position by dividing the collateral by the debt. Anyone can liquidate a position with a health factor below 1 by repaying the debt and getting some collateral.
PeckShield, a blockchain security firm, reported that the hacker’s position had a health factor of around 1.03, which put it at risk of liquidation if the BNB price dropped below $220.
At press time, BNB is trading at around $225, down by 25% since June 5, when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance.
Venus Protocol said on Twitter (and later deleted it) that it was ready for the hacker’s possible liquidation.
The protocol stated that the Binance Chain core team would take over the position as planned if the BNB price reached the liquidation threshold.
The protocol also said that the liquidator address had set aside $30 million in USDT to repay the debt and that more funds were available if necessary. It assured its users that there would be no BNB dumps or gaps on Venus.
Venus’s statement was met with mixed reactions from the crypto community. Some praised the protocol’s transparency and preparedness, while others questioned its credibility and security.
