Curve Finance Recommends LINK For Stopping Flash Loan Attacks
Curve Finance recommends Chainlink’s price oracles in order to stop flash loan attacks as the attackers are using them more and more to manipulate the prices. Curve was attacked as well and now wants to stop that. In today’s Chainlink news today, we are reading more about it.
Some projects misused Curva as the price oracle which led to even more attacks but Chainlink claims that it can prevent some of these attacks. After DeFi protocols lost about $100 million in damages, a string of flash loan attacks in part of misappropriation of the technology from Curve Finance, Curve recommended that the decentralized finance protocols rely on integrating Chainlink which is a decentralized oracle network.
— Curve Finance (@CurveFinance) November 27, 2020
The recommendation came after a few attacks where the hackers took out flash loans from Defi lending protocols to manipulate Curve Liquidity Pools that several DeFi projects used as price oracles previously. The attackers were able to do this because some DeFi protocols relied on Curve’s calculations about the price of the crypto that is held in liquidity pools. Among the recent attacks which used flash loans to manipulate the price of the stablecoins that are held in the Defi protocols which are the target of an attack on DeFi lending protocol Compound. It resulted in an $89 million loss while an attack on Harvest finance drained $34 million. Also, there was a $2 million attack on Akropolis as well.
Sergey Nazarov, the co-founder of Chainlink said that the problem is not with Curve but with the misappropriation of its technology by Defi projects that rush to get their products online. These projects misused the liquidity pools as the price oracles which is something that should not be used as a price oracle. Nazarov compared it using a “hammer as a screwdriver.” Nazarov said that these projects used Curve’s liquidity pools as price oracles due to the rapid pace at which they are creating new protocols:
It was a quicker solution to their need for a price oracle, and maybe they didn’t expect that they would acquire so much value so quickly.”
Curve is the sixth-biggest Defi protocol where investors locked up $882 million worth of crypto assets in the vaults according to Defi Pulse. Curve recommended that the DeFi protocols avoid using Curve as a price oracle which is a system that usually determines the price of stablecoins and they rely on a “reliable price oracle that provides an accurate picture of the global market price of the asset in the Liquidity pool.”