Blizz Finance Post Mortem
On Thursday May 12, abnormal volatility in the price of LUNA triggered Chainlink’s minimum price circuit breaker. The oracle stopped updating with a final price of $0.10. Around the time we became aware of the issue it was reported on twitter, and already being actively exploited by multiple addresses. Large amounts of LUNA were deposited and used to drain all available lendable assets.
The issue could have been avoided by pausing the LUNA market as volatility increased. We did not do so because at the time, we felt that the percentage of LUNA deposits relative to the total TVL was not significant enough to warrant concern. We believed that liquidations would occur as necessary to avoid bad debt. Prior to the incident the Chainlink team did attempt to notify us that the oracle would pause, however we did not receive the message in time.
We were unaware of Chainlink’s minimum price circuit breaker. This behaviour is not mentioned anywhere within Chainlink’s documentation. Blizz’s oracle smart contract code is a direct fork of Aave v2, which does not contain any logic to handle such a scenario.
Since the incident, Chainlink has reduced the minimum price. The oracle is once again functional.
Blizz has no treasury or development fund and a significant portion of the stolen assets belonged to our team. As such we regret to announce the protocol has been paused and we do not intend to resume operations. We will be shutting down the front-end and closing official communication channels in the coming days.
Funds held by the protocol in LUNA (around $1.5M or 25% or the protocol holding pre-exploit) will be distributed to users using a snapshot prior to when the attacks began. Further details will be announced in coming days. We cannot do this immediately due to our timelocks.
We are very sorry for the losses incurred by our users. We thank the community for their support on this journey and deeply regret that this is how it came to an end.
