Venus Releases Preliminary Analysis of Exploit and Lowers Collateral Factors for 7 Markets to 0

On March 16, Venus Protocol released its **THE Fund Pool Exceptional Activity Update** in response to the recent incident. In addition to the prior suspension of THE borrowing and withdrawals, the collateral factor (CF) for 7 markets has been cut to 0 as a precautionary measure—this follows a single user holding a disproportionately high collateral ratio in the market. The 7 markets are BCH, LTC, UNI, AAVE, FIL, TWT, and lisUSD. All other markets remain unaffected and continue operating normally. Preliminary findings on the attack method show the hacker began gradually accumulating THE tokens via regular deposit activities in June 2025, eventually controlling 84% of the total supply (roughly 12.2 million THE). Yesterday, the attacker transferred THE directly to the protocol contract, instantly inflating the token’s supply and generating a massive amount of collateral. They then executed a recursive price manipulation scheme: leveraging the protocol’s low on-chain liquidity and a delay in its TWAP oracle, the hacker launched a loop: deposit THE → borrow other assets → use those funds to buy more THE on-chain → wait for the TWAP oracle to update and push THE’s price higher. Venus stated it remains committed to transparency and will publish a full post-investigation report once the probe concludes.