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Recap: Curve suffered a "governance attack" by the Mochi stablecoin USDM team, losing over $30 million

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Explain more details of the USDM team using Convex to launch a governance attack on Curve.

Original title: "Curve Finance was "governance attacked" by a "dog" project, and the project party harvested nearly 30 million US dollars from miners"

Original source: Chen Zou

On Thursday, Charpe_eth, a core member of the Curve blockquoteergency DAO, published a post. The abnormal fluctuation of CVX price caught the attention of the DAO, and finally found that it was stabilized by USDM A "governance attack" launched by the currency protocol Mochi protocol.

According to Mochi's official white paper, the project is a self-managed decentralized stable currency protocol, which still uses over-collateralization (collateral value> The value of the loaned assets), which can realize the listing of mortgage assets without threshold and based on specific conditions. Mochi users can mint USDM stablecoins against listed collateral through the Mochi Vapt smart contract.

In this attack, Mochi used the governance vulnerabilities of its own protocol, Curve, and Curve's revenue aggregator Convex to complete this "governance attack".

On November 10th, Mochi launched its governance token MOCHI INU and incentivized the liquidity of its USDM stablecoin. The Mochi project party used the large amount of Mochi it held to print a large amount of USDM, and then exchanged a large amount of Dai on Curve, but the project party still did not choose to cash out immediately, and then used Dai to purchase a large amount of Convex governance token CVX (about 6,000 ETH, $28 million). This step is very subtle, and even attracted the attention of a large number of CVX holders.

Curve suffered a

To understand why the Mochi project If you want to spend so much effort to transfer all your assets to CVX, you need to understand the role of CVX.

Convex Finance is a "CRV" dedicated to simplifying the use of Curve One-stop platform for staking and liquidity mining”, that is, the revenue aggregator on the Ethereum chain, and CVX is its governance token on the chain. The token can be used to vote on proposals to increase remuneration for CRV holders, liquidity providers. It was originally suitable for promoting the development of the CRV ecosystem, but here it became a tool for Mochi to complete the "governance attack".

Next, the Mochi project party used a large number of CVX to vote and successfully increased the yield of the liquidity mining pool (distribution of CRV rewards) , which attracted more liquidity providers to participate, until the liquidity in the pool reached 100 million US dollars, the project party felt that it was time to harvest, so they chose to exchange Mochi for USDM, and finally exchanged for DAI, directly cashing out Running away, it is estimated that about 46M USDM was eventually exchanged for DAI, about 30 million US dollars. This is only the income of the project side. Considering the large amount of transaction fees, slippage and other losses, the loss of miners may be far greater than this value. According to relevant sources, a domestic Chinese investor “mining penguin” lost nearly $5 million in the harvest.

The emergence of Curve has solved the anchor point and slippage problems of stable coins, and various stable coins have emerged. Curve adjusts the weight once a week and locks the position The veCRV of CRV determines the liquidity of CRV. Most of the CRV in the market are locked, and the average lock-up time is greater than 3 years, and Convex controls about 40% of veCRV. From these data, in fact, most of the liquidity income of CRV is given to Convex, so CRV shares can be obtained through Convex. Curve’s one-protocol three tokens and income plan are more complicated. Convex allows users to pledge, Claiming CRV, although Convex is only a vertical asset management agreement for Curve, the amount of locked veCRV pledged in Convex far exceeds that of yEarn.

As a remedy, Curve Finance has completely shut down the USDM gauge, making it immediately stop receiving CRV output, avoiding a wider range of losses.

Yearn Finance founder Andre Cronje called it an "amazing scam".

Curve was

What's more interesting is that the Mochi Inu project announced all the nesting doll operations , but did not respond to Curve closing its reward pool.

Curve was

according to Coinmarketcap data It shows that the value of Mochi Inu has plummeted, with an intraday drop of 55.59%, and the current price is $0.00002627, but it has not returned to zero.

Curve has been stabilized USDM team