Zunami Protocol Suffers $2.1M Loss in Classic Price Manipulation

• Zunami Protocol’s zStables pool on Curve Finance targeted in latest DeFi attack.
• The exploit amounting to $2.1M was detected by PeckShield and Ironblocks.
• UZD value crashes over 99%, and zETH drops 88% to $206.

Zunami Protocol’s core liquidity pool, hosted on the decentralized exchange Curve Finance, has become the target of the latest attack in the decentralized finance space. The exploit, which resulted in a loss of more than $2.1 million, was detected and reported by blockchain security firms PeckShield and Ironblocks.

Zunami Protocol, a platform specializing in yield farming aggregation for stablecoin staking, has reported that its zStables pool on Curve has suffered an attack. According to Peckshield, the hack resulted in more than $2.1 million in losses through two separate transactions. “It is a price manipulation issue, which can be exploited by donation to incorrectly calculate the price as shown in the following figures,” as reported.

Ironblocks further explained that the attacker initiated a flash loan from the balancer, injecting liquidity to manipulate the price significantly. This manipulation allowed the attacker to exploit the exchange on Zunami’s platform. Afterward, the attacker removed the liquidity and further adjusted the price. The attacker then was able to execute trades and ultimately walk away with 1,152 ETH. “Classic price manipulation,” Ironblocks concluded.

Following the attack, the stolen funds were detected flowing into Tornado Cash, a privacy-focused decentralized application known for obfuscating the origins of transactions. This indicates that the hacker is now attempting to launder the stolen assets, potentially cashing out the proceeds from the exploit.

In response to the attack, Zunami Protocol assured its users that the collateral remained secure and that an in-depth investigation was underway. The platform cautioned against purchasing its Zunami USD stablecoin (UZD) and Zunami Ether (zETH) in light of the incident.

Unfortunately, the hack’s repercussions were evident, with the UZD plummeting by over 99% in value and the zETH experiencing an 88% decline to $206.

Notably, this incident also raised concerns about the security of Curve Finance, which had grappled with several attacks, including a massive $19 million theft.