Scream, a Fantom network decentralized lending protocol, incurred a $35 million debt after failing to adjust the prices of two stablecoins that lost their peg on its platform. The DeFi protocol had hardcoded the value of these affected stablecoins, Fantom USD (fUSD) and DEI, to $1, meaning their decline did not reflect on its platform.
Whales with the coins used this to drain the protocol of every other stablecoin while depositing the two de-pegged tokens. FRAX, Fantom USDT, USDC, and MIM are among the stablecoins extracted from the network.
The protocol has suffered massive losses, with DEI plunging as low as $0.52 and fUSD hitting $0.69. However, the fact that fUSD had an infinity limit on the platform exacerbated the situation, allowing the actors to drain the protocol by borrowing against bad debt.
According to data on DeFiLlama, the protocol has lost 50% of the total value of assets locked in its smart contract within the last 24 hours.
Aside from that, the native token SCREAM has lost more than 70% of its value. According to CoinCu data, it is now trading for $3.97 as of press time.
Scream confirmed the incident and stated that it is collaborating with the Fantom Foundation to address the problem. The team’s proposed solution is to “liquidate all underwater fUSD loans using a liquidation bot.”
Within the next several hours, it also continued to hardcode the fUSD price to $0.81. Those who had maintained a healthy position may face liquidation as a result of this. As a result, the protocol has directed those who owed it money to repay their loans in order to avoid being liquidated.
As for DEI, Scream said the issuer DEUS Finance DAO decided to issue treasury bonds with restoring the rate. These bonds will allow users to deposit collateral and earn a fixed interest based on the maturity date.
DEI is suffering from the aftermath of stablecoin concerns caused by the failure of UST-LUNA and the decision by the developers of DEUS Finance to pause DEI acquisition. On the other hand, this is also considered the next significant step backward for the project because only about 2 weeks ago, DEUS Finance was “visited” by hackers, causing a loss of $13.4 million.
Scream also announced a policy adjustment. Instead of hardcoding pricing, it will now use Chainlink Oracles to obtain them in real-time. This would prevent a repetition of the situation in the future.
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