Case summary
What happened
On 2021-05-18, extreme XVS price movement and resulting liquidations left two major Venus accounts with a shortfall reported later as 2,008 BTC and nearly 6,000 ETH. Venus implemented a treasury/XVS bailout recovery process rather than treating the shortfall as a protocol shutdown. On 2026-03-15, a separate attacker targeted the THE market on BNB Chain, combining direct-token donation that bypassed the normal supply-cap path, exchange-rate inflation, thin-liquidity price manipulation and borrowing. The attack left roughly USD 2.15 million of bad debt. Venus paused affected markets and introduced remediation measures but remained operational. A July 2026 protocol report continued to show active lending-market supply and debt.
Customer result
Customer outcome
Unknown
Venus published an active bailout/recovery process for the May 2021 shortfall and reported partial repayment progress in 2021, but the evidence reviewed for this batch does not establish a universal final recovery percentage or a definitive completion date. The March 2026 THE incident produced protocol bad debt that Venus stated would be covered by the protocol; this is not treated as evidence of direct customer claims or a completed recovery outcome.
- Estimated recovery
- Unknown
- Repayment started
- —
- Repayment completed
- —
- Confidence
- High
Asset treatment
Terms risk
Customer-owned
Venus is modeled as non-custodial DeFi lending rather than a platform-owned account balance. Non-custodial custody does not eliminate economic and protocol risk: the 2021 shortfall exposed collateral-price/liquidation risk, while the 2026 THE incident demonstrated that direct-token donation, supply-cap enforcement gaps, thin-liquidity collateral and oracle-price behavior can combine to create protocol bad debt even without platform custody of user balances.
- Affected product
- —
- Confidence
- High
Known unknowns
Uncertainty
CYA does not infer a final universal recovery percentage for the 2021 shortfall from the published bailout progress reports. The 2026 THE event is bounded to the affected markets and its roughly USD 14.9 million gross borrowing during the attack is kept distinct from the roughly USD 2.15 million final bad debt reported by the protocol.
Chronology
Historical record
Venus XVS-linked liquidations create major BTC and ETH shortfall
Following extreme XVS price movement and insolvent liquidations, Venus Protocol later reported a shortfall across two major accounts of 2,008 BTC and nearly 6,000 ETH. The protocol developed a bailout mechanism using treasury-distributed XVS and other reserve resources to repay the shortfall over time.
The BTC and ETH figures are protocol shortfall quantities reported by Venus, not a universal customer-loss amount. CYA does not mark the recovery complete without first-party evidence establishing completion.
Venus THE market attack bypasses supply cap and leaves approximately USD 2.15 million bad debt
An attacker targeted the THE market on Venus Protocol's BNB Chain core pool by combining direct token donations that bypassed the normal mint-time supply-cap check with exchange-rate inflation, thin-liquidity price manipulation and repeated borrowing. The attacker borrowed roughly USD 14.9 million in assets during the attack. After liquidation and unwinding, Venus reported approximately USD 2.15 million in bad debt, primarily in CAKE and THE. Borrowing and withdrawals in affected markets were paused and risk parameters were tightened while the protocol remained operational.
Gross assets borrowed during the attack and final bad debt are distinct metrics. The official post-mortem bounds the operational impact to affected markets rather than a protocol-wide shutdown.
Source record
Evidence dossier
Filter by claim, reliability, source type, and whether evidence is linked to a specific event.
customer outcome
1 sourcesVIP-29 Add Grant Program and Bailout Feature
Venus Protocol Governance · 2021-06-16
Documents the proposed bailout feature used in the shortfall recovery path.
Event
2 sourcesVenus Protocol Weekly Update W40/2021 & Shortfall Recovery Report
Venus Protocol · 2021-10-11
Reports the May 18 shortfall as 2,008 BTC and nearly 6,000 ETH across two major accounts and describes the bailout/recovery mechanics and September 2021 progress.
THE Market Incident Post-Mortem
Venus Protocol / Allez Labs · 2026-03-17
Provides attack flow, supply-cap-bypass root cause, roughly USD 14.9M gross borrowing, approximately USD 2.15M bad debt, affected-market boundaries and remediation steps.
status
1 sourcesVenus Monthly Report: July 2026
Venus Protocol / Allez Labs · 2026-08-07
Shows continued active protocol operation after the March 2026 incident, including BNB Core Pool supply and debt metrics for July 2026.
No evidence records match the current filters.
Comparative records