Resolv Labs has temporarily paused its protocol after an exploit on Sunday in which an attacker minted 80 million unbacked tokens, knocking the dollar stablecoin sharply off its peg and briefly plunging the token to $0.14.
The Resolv Foundation team announced on X on Monday evening that all protocol functions, including the app, were temporarily halted “to contain the impact of the exploit,” freezing Season 4 airdrop claims as well as staking and unstaking of RESOLV tokens.
Resolv previously said the collateral pool remained intact with no loss of underlying assets, despite onchain analysis showing that the attacker had successfully converted most of the minted USR into Ether (ETH) and sold around $25 million. USR is currently trading near $0.24, far below its intended dollar peg.
In an onchain ultimatum on Monday, Resolv offered the exploiter a white hat-style deal: return 90% of the converted funds (around $25 million in ETH) plus all remaining USR within 72 hours, keep 10% as a bounty, and cease further activity or face the consequences.
“Failure to comply within the stated timeframe will result in escalation,” the ultimatum states, such as asset freezes coordinated with exchanges and bridges, public tracing and law enforcement action. There have been no movements on the main wallet since.
USR dropped 86% off its peg on Sunday. Source: CoinGeckoMichael Pearl, vice president GTM and strategy at Web3 security company Cyvers, told Cointelegraph that redemptions had reopened only for legitimate pre-exploit holders, while Resolv and partners continued to trace “bad USR” and prepare a full post-mortem.
Related: Balancer Labs shuts down 4 months after $100M+ exploit, protocol to continue
Resolv exploit reignites stablecoin PTSD
Beyond Resolv, the incident has rekindled the industry’s unresolved trauma from the Terra ecosystem collapse of 2022, when the Terra USD (UST) algorithmic stablecoin’s death spiral erased tens of billions of dollars in value and reshaped regulatory and risk perceptions around stablecoins.
Pearl said the USR depeg had “opened a Pandora’s box,” noting that it had triggered roughly $180 million in liquidations on lending protocol Morpho and some $334 million in outflows from lending and liquidity platform Fluid, but “limited spillover overall,” as nervous stablecoin issuers revisit their own assumptions about peg reliability.
“We hear many stablecoin platforms that are petrified after this exploit,” he said, and with decentralized finance (DeFi) now deeply intertwined with stablecoins, Pearl warned that while protocols can sometimes absorb hacks and move on, a serious failure at the stablecoin layer “can finish the company,” a risk that USR’s collapse has just put back in sharp focus.
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Source: https://cointelegraph.com/news/resolv-protocol-temporarily-halted-80m-exploit?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
