Mycelium, a Web3 ecosystem, recently experienced losses in one of its liquidity pools due to issues with the price feed and the blocking of its IP address by the Binance API module. In a statement released by the team, it was revealed that an arbitrage bot exploited a discrepancy in the Ether (ETH) price on the platform, leading to significant losses for the Mycelium ETH/USD pool. The bot took advantage of the high spread and abused the liquidity on the platform.
The discrepancy in the price feed was attributed to the Bitfinex API, which started broadcasting highly volatile prices for the ETH/USDT pair at around 02:45 a.m. AEST. This, coupled with the fact that the other price feed provider, Binance, had blocked the protocol’s U.S.-associated IP address, resulted in the system being unable to rebalance the price using an independent feed. As a result, Mycelium had to rely solely on data from Bitfinex and Coinbase due to the outage from Binance, which was not widely communicated.
Once the issue was detected, the team launched an internal investigation and halted trading on the affected pool for 2.5 hours. The postmortem revealed that the incident led to a degradation of the Mycelium Liquidity Pool (MLP) by 4-6%. With a 24-hour trading volume exceeding $218 million, the losses were significant. As a response to this incident, Mycelium has decided to implement stronger monitoring of feeds, improved alerts, and faster communication in order to prevent similar incidents from occurring in the future.
In light of this incident, Mycelium experts have acknowledged the need for enhanced measures to prevent similar incidents from happening again. They have vowed to implement stronger monitoring of price feeds, improved alerts, and faster communication in order to mitigate risks and protect the protocol’s liquidity pools. The team has also emphasized the importance of transparency and effective communication in ensuring the security and stability of the platform.
This incident serves as a reminder of the vulnerabilities that exist in the DeFi space and the importance of implementing robust security measures to protect against potential exploits and attacks. Mycelium’s response to this incident highlights the protocol’s commitment to addressing issues promptly and taking proactive steps to strengthen the security and resilience of its ecosystem. By learning from past incidents and implementing best practices, Mycelium aims to build a more secure and reliable platform for its users.
As the DeFi space continues to evolve and grow, it is essential for protocols like Mycelium to remain vigilant and proactive in addressing potential vulnerabilities and threats. By investing in robust security measures, implementing best practices, and fostering a culture of transparency and communication, DeFi platforms can build trust with their users and ensure the long-term success and sustainability of the ecosystem. Mycelium’s response to this incident serves as a valuable lesson for the broader DeFi community and underscores the importance of proactive risk management and security measures in safeguarding users’ funds and assets.
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