Gauntlet wants to notify the community we are aware of a potential hack to the Multi-chain bridge for Moonriver. As initially posted by Peckshield on twitter, Multichain bridge looks to have been hacked on Fantom. After further digging, our team noticed suspicious transactions from Moonriver Bridge to ETH mainnet. Pause guardians have been used to pause USDC.multi, ETH.multi, and USDT.multi, which we recommended and agree with. We are monitoring the situation and will recommend further actions or parameter adjustments as needed.
We are closely monitoring the assets on the Moonriver chain that are connected to Multichain. If the Multichain bridge has been hacked and its funds potentially drained, we have identified a significant risk to Apollo post-Pause Mint Guardian actions.
This risk involves the potential depegging and depreciation of the multichain bridged assets, which could lead to their price decreasing significantly. It is important to note that the Chainlink Oracle price feeds may not accurately reflect the depegging of these assets, as they rely on pricing sources external to the Moonriver ecosystem. Consequently, this situation exposes Apollo to the possibility of active suppliers of multichain assets attempting to recover losses by borrowing non-multichain assets, resulting in bad debt. Without this action, the Apollo protocol could be exposed to a potential bad debt of ~$1.6M.
Based on the potential risk, we recommended and agree to pause all transfers and borrows for all assets on Apollo.
Current Market Data
We are currently seeing signals of potential de-pegging of multichain assets within the market. These market signals confirmed to our teams the need to pause the protocol.
USDC.multi to FRAX Exchange Rate shows that USDC.multi’s value has dropped to $.93 relative to FRAX.
As shown by the large spike in USDC.multi liquidity on Solarbeam, users are swapping out of USDC.multi
The large inflow of USDC.multi liquidity is evident in the FRAX + 3pool AMM Stable pool. The multichain assets are overweight relative to FRAX.
Gauntlet wanted to give the community an update on the developing Multichain incident and the risks to Apollo. We have been monitoring the situation and evaluating what the best next steps are. At this time, we recommend the following:
- Keep markets frozen/paused to prevent users from taking on more risk
- Keep transfers paused
The overall risk of bad debt (assuming multi assets go to zero) to the protocol is less than ~$50k. ~3% of borrows are non-multi assets collateralized with multi assets.
At the moment, we believe deprecating all MULTI assets would decrease risk. The Gauntlet team is working on a deprecation plan for MultiChain assets and will provide a further update on how we plan to deprecate the market today.