Venus Protocol Faced $200 Million Mass Liquidation... Biggest in the Defi History

          Amid the today's bloodbath, the defi world got its biggest bad debt to date. Venus, a defi lending and borrowing protocol on Binance Smart Chain faced a massive liquidation of over $200 million due to a price manipulation of it's native XVS token.

Venus protocol offers crypto loans to its users against it's native XVS token as a collateral. The loan amount is naturally lower than the worth of XVS token deposited as collateral.

So today, a price spike of XVS token from $76 to $144, allowed users to lend more fund against their XVS collateral. But just a few hour latter the price of XVS dropped significantly, causing the loans to become under-collateralized. So borrowers instead of paying back the loan, choose to keep their borrowed tokens. The protocol acted the way it was supposed to, liquidating the collateral. But the price of liquidated collateral was far to less than the debt amount. The event caused Venus a bad debt of 2,000 Btc and 5,700 Eth.

As per Venus founder Joselito Lizarondo, the cause of price spike was a possible market manipulation on Binance exchange. Large market orders along with lower XVS supply made price manipulation possible. Lizarondo also said Venus will use its grant program to cover for the shortfall.

Venus will revisit each asset they support, work with oracle providers to get better deviation update and lower their collateral factors safely so ensure mass liquidation event never happen again.

The liquidation at Venus is the biggest one in defi history. Last year Compound faced a liquidation of $88 million because of price spike of DAI stable coin.