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DeFi platform Mirror Protocol (MIR-USD) is having a rough week after an already rough month. It appears an exploit tied to the recently rebranded Luna Classic (LUNC-USD) is making for another headache. The news is a sucker punch to a network already subjected to the worst of the Terra network’s volatility.
Mirror is a synthetic asset platform native to the Terra ecosystem. Using it, one can create “synthetic assets,” which mirror their real-world counterparts in price. Essentially, these synthetic assets can be used just like the real thing, offering users exposure to the assets’ prices without actually having to own them directly. It removes a layer of volatility, allowing one to more aggressively invest in or utilize different crypto assets.
It is also a highly decentralized protocol, allowing users to create these synthetic assets without needing approval from a central body. The network relies on deep liquidity pools to fuel the network, removing the need for order books.
However, decentralized as it may be, Mirror is seeing the downside of choosing the “wrong” network. Terra is the blockchain on which it stakes its claim, and while the relationship has been smooth sailing for much of Mirror’s existence, recent Terra mishaps have proven all too influential on MIR crypto prices.
Mirror Protocol Suffers a Luna Classic Exploit
Earlier in the month, Mirror Protocol saw hefty losses as Terra prices collapsed. Ultimately, MIR crypto shaved off more than half of its value as Terra’s LUNA and TerraUSD (USTC-USD) fell to just pennies apiece. But as Terra mounts a comeback campaign, Mirror continues to suffer.
Indeed, MIR is already in a Terra-shaped hole. After the latter’s downfall, MIR prices fell in sympathy, moving from $1 to around 27 cents. In the weeks since, the network has been trying to build prices back up with little success.
Today it sees another setback: A pricing oracle on the platform is allowing an exploiter to drain millions of dollars in assets from the protocol. The news relates to Terra’s big revival plan. Developers are looking to restore the network’s ecosystem by launching a new Terra (LUNA-USD) coin and rebranding the original LUNA to LUNC. On Friday, these coins saw listings across several exchanges, both large and small.
But as Mirror looked to add Luna Classic to its platform, it left a bug in the code for a LUNC price oracle. A bad actor is exploiting this bug to manipulate assets on the network by taking and depositing them into a personal wallet. So far, the exploiter has drained more than $2 million from the platform. Some worry they could deplete the network’s liquidity pools.
This comes just hours after another exploit was reported on the network. Another person was able to drain $90 million in assets from Mirror for seven months until the hole was discovered in the protocol.
While Mirror developers rush to correct the issue, MIR crypto prices are trading down by nearly 11%.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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