Mango Markets hacker allegedly simulated a short Curve attack to mine Aave

It appears that the shorting of CRV tokens was a distraction move to exploit a sophisticated flaw in the DeFi Aave platform.< /p> New

As described by analysts at Lookonchain on November 22, tokens on decentralized exchange Curve Finance (CRV) appear to have suffered a major short-selling attack. According to Lookonchain, ponzishorter.eth, an address associated with Mango Markets exploiter Avraham Eisenberg, first traded 40 million USD (USDC) coins on November 13 against decentralized finance protocol Aave to borrow CRV for sale. .

The act reportedly caused the price of CRV to fall from $0.625 to $0.464 during the week. Fast forward to today, blockchain data shows that ponzshorter.eth borrowed an additional 30 million CRV ($14.85 million) via two transactions and transferred it to OKEx to sell. The Lookonchain team speculated that the transaction was conducted to drive down the price of the token "so many people who used CRV as collateral will face liquidation".

In response to the heavy selling activity, a portfolio associated with the founder of Curve has added an additional 20 million CRV as collateral. On Aave, the wallet address health factor was 1.65 at press time, indicating excess collateral over borrowed assets.

But as blockchain analytics firm Arkham put it, transactions “can just be bait,” with Aave being the main target instead. Arkham claims that Eisenberg built up a position of over $100 million in Aave for a sophisticated trading system.

This first involves a distraction short of CRV tokens on Aave, which is illiquid on the platform but also has very low margin requirements, both of which are important factors for the exploit. The ensuing attention would cause users to buy the dip en masse to defend the price of CRV, and for others to try and pressure the short seller to cover their position in the event of a loss.

However, the real conspiracy seems to be exploiting the possibility that...