Representatives for the company’s creator, Michael Egorov, stated over Telegram conversations on Friday that the exploit of UwU Lend on Monday set in motion a sequence of events that culminated in Thursday’s multimillion-dollar liquidations on the DeFi lending behemoth Curve. On Thursday, the $100 million in loans that Egorov obtained from several protocols utilising Curve’s CRV tokens began to automatically liquidate.
This caused the token to drop as much as 30% before momentarily rising again. The cryptocurrency system UwU Lend, which enables users to burrow, lend, and stake tokens, has been identified as the cause of the bad debt and liquidations.
“The entire platform bears the risk because they (UwU Lend) deployed vulnerable code for new (sUSDe) markets on April 15 and those markets are not isolated,” Egorov stated. “Cash-out play was used to hack UwU.
The hacker deposited CRVs stolen from UwU to lend.curve.fi (LlamaLend) and then vanished with the money, leaving his debt in the system.” Following a flash loan assault on Monday, UwU Lend lost $20 million, and in a subsequent attack on Thursday, it lost an additional $3.7 million. It is providing a $5 million bounty as of Friday in hopes of apprehending the perpetrators.
Egorov estimated bad debt in a certain CRV lending pool to be $10 million in an X post. Although there is complete segregation between this market and other lending pools, depositors in the CRV were unable to access their money as long as the bad debt persisted.
But according to Egorov, the circumstances might strengthen Curve’s loan policies and security procedures, improving customer experience in the months to come. “Unthinkable conditions were tested the system yesterday,” Egorov added. “We have a lot on our plate, but above all, we have all the data needed to create the safest and most resilient lending and borrowing that has ever been done.”
“I’m committed to making sure that everyone may easily withdraw their deposits. My top focus is always Curve Finance, and our community comes first,” he continued. According to DefiLlama data, as of Friday, Curve has over $2 billion in locked assets, making it one of the biggest crypto protocols.