xcUSDT Liquidity Analysis and Recommendations

xcUSDT Liquidity Analysis

Gauntlet wants to provide the community with an update on the situation of a potential exploit on parachain and lending protocol Parallel Finance. At this time, there appears to be a malicious exploit of a DOT price mismatch within their lending market in which DOT is underpriced. We are still trying to understand the potential insolvencies that could arise, but here is an example of one account with a $2.67M supply and a ~$2.66M borrow of DOT (at the actual price of $10.35 per DOT).

Moonbeam and Moonwell Ecosystem

The current liquidity on Stellaswap is unchanged, with 215k USDT being swapped for USDC at 25% slippage. There is currently 819,659 circulating supply of xcUSDT on the Moonbeam Chain at this time, as shown in the chart below. We have seen some large outflow in the past days from Moonbeam, but the circulating tokens rebounded within the past 24 hours

The top USDT borrow positions are listed below. The largest borrow position has approximately $110k borrowed. This data provides signal to us any exposure to Parallel will be minimal.

Here is the borrow for the USDT; at this time, we do not see any signal of malicious use of our liquidity pools.

As of writing, both Binance and Gate.io allow withdrawals of xcUSDT to Polkadot Asset-Hub, alleviating liquidity concerns. Gauntlet will continue to monitor liquidity within the Polkadot ecosystem.

Next Steps

  • Continue to monitor this situation and USDT positions on the Moonbeam market.
  • Gauntlet will recommend lowering the borrowing cap to 800k.

Suspected positions/exploiters:

We believe this address is associated with the exploiter who initially transferred DOT tokens to this location, then moved them through a series of transactions to this address and a parachain, finally transferring some of the DOT tokens to Binance.