This morning, the BNB Chain developer team liquidated over 6.89 million Venus BNB (vBNB) tokens, worth $30 million, from an infamous wallet that had borrowed over $150 million worth of stablecoins from the Venus Protocol. This move was in line with a November 2022 governance vote, and follows a similar event from last week where $60 million worth of the exploiter’s loan was liquidated. Liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin.
The unknown attacker had deposited BNB tokens on the Venus lending protocol to borrow $150 million worth of stablecoins. However, with BNB prices steadily falling in the past year, the massive loan has recently been close to being liquidated – a move that could send BNB prices quickly tumbling as the token is sold in the open market to save the loan.
As the market is very volatile, there is a potential risk that if liquidated, this large portion of BNB may cause more cascading liquidations effect and unnecessary damage to the market and cause more risks to Venus, Venus users, BNB token, and BNB Chain, Venus said in a since-passed proposal in November 2022. To prevent such a collapse, Venus and BNB Chain are working together to take over the position in case it hits the liquidation line, by repaying the debt in a joint effort.