DeFi protocol Linear Finance suffered a security attack on September 21, resulting in the draining liquidity of ℓUSD from the exchange. The attacker drained all ℓUSD liquidity on both PancakeSwap and Ascendex, resulting in the price of ℓUSD going to zero.
The exploit of the protocol’s smart contract allowed attackers to mint an unlimited amount of ℓAAVE, a collateral token on Linear.
Linear shared that the attacker claimed stablecoin ℓUSD using AAVE collateral tokens and swapped all ℓUSD from liquidity pools on PancakeSwap and Ascendex. This resulted in stablecoin’s price going to zero.
Following the attack, Linear paused all smart contracts that allowed users to mint, burn, or swap tokens. It also disabled the bridge contract for ℓUSD. The linear team has also contacted the industry leading security team to look into the matter.
The data from DeFiLlama shows that Linear Finance has a TVL of over $8 million, which remained unaffected prior to this attack. Protocol’s native token, LINA, also avoided any major downturn despite the attack.