Inverse Finance Faces $240,000 Loss Due to LlamaLend Mechanism

Inverse Finance has reportedly suffered a loss of approximately $240,000, according to PANews. YAM Finance addressed the incident on the X platform, clarifying that the issue was not due to a vulnerability in the Inverse contract but was related to the LlamaLend mechanism. The attack involved a 'donation attack' on sDOLA, which increased the price from about 1.188 sDOLA = 1 DOLA to approximately 1.358 sDOLA = 1 DOLA. This led to the liquidation of nearly all positions collateralized with sDOLA and borrowed in crvUSD. The reason why the increase in collateral value triggered liquidation remains unclear, as it would typically move users away from the liquidation threshold. The secondary effects of this price anomaly are still ongoing. Users who did not engage in leverage operations on LlamaLend and only held sDOLA have seen their paper gains increase by about 14%. Additionally, DOLA is currently trading at a roughly 1% discount to its pegged value in the secondary market. Some community members have suggested that borrowers consider repaying their DOLA debt during this discount phase.