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Convergence Protocol Exploit Causes CVG Token Crash
Explore the recent Convergence Protocol exploit that led to a significant crash of the CVG token. Understand the implications for investors and the broader cryptocurrency market in this detailed analysis.
Convergence Protocol Exploited in Major Attack
The decentralized finance (DeFi) protocol Convergence, which is built on the Curve ecosystem and designed to enhance yield, fell victim to a significant exploit on Thursday. This attack caused the price of its native token, CVG, to plummet to nearly zero.
The malicious actor took advantage of a vulnerability within the protocol’s codebase, minting an astonishing 58 million CVG tokens. Subsequently, these tokens were swapped for approximately 60 wrapped ether (wETH) and 15,900 crvFRAX stablecoins through liquidity pools on Curve, as detailed by the web3 security auditing firm QuillAudits.
Blockchain analysis from Etherscan indicates that the attacker converted the stolen funds into ether (ETH) before transferring them to Tornado Cash, a platform known for its privacy features. The total estimated loss from this exploit is around $210,000, according to QuillAudits.
In addition to the immediate financial repercussions, CVG token holders faced further losses as the token’s fully diluted value (FDV) of $17 million before the attack was effectively wiped out. Following the incident, the price of CVG experienced a staggering decline of 99%, plummeting from approximately $0.12 to just $0.0004 within the Curve liquidity pools.
In light of this incident, the Convergence team has urged users to refrain from interacting with the protocol until further notice to prevent additional losses.