USP Stablecoin Loses Dollar Peg as DeFi Protocol Platypus Suffers $8.5M Attack

The flash loan attack caused Platypus Finance’s native stablecoin to fall to 48 cents from $1. The potential loss is $8.5 million, according to blockchain security firm CertiK.

AccessTimeIconFeb 16, 2023 at 9:34 p.m. UTC
Updated Feb 17, 2023 at 11:03 a.m. UTC

Decentralized finance (DeFi) protocol Platypus Finance suffered a flash-loan attack on Thursday, blockchain security firm CertiK tweeted. The potential loss in the exploit is $8.5 million.

Platypus USD (USP), the protocol’s stablecoin, lost its price peg to the dollar as a result of the exploit, falling to 48 cents from its $1 anchor, according to CoinGecko.

"For now all operations are paused until we get more clarity," a Platypus team member posted in the protocol's Discord server.

Platypus is an automated market maker built on the Avalanche blockchain where crypto traders can swap stablecoins. It has $59 million worth of digital assets locked on the protocol, significantly less than the all-time high of $1.2 billion reached last March, data by DefiLlama shows.

A flash loan is a type of uncollateralized borrowing popular on decentralized finance (DeFi) lending protocols among traders to quickly profit from arbitrage opportunities. However, exploiters often tap flash loans to destabilize and drain digital assets from DeFi protocols.


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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.