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Attackers exploited minting logic to create 50M unbacked USR, amplifying 100K USDC into massive token output.
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Rapid swaps into USDC, USDT, and ETH triggered sell-off, crashing USR to $0.257 and briefly as low as $0.025.
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Resolv paused protocol, confirmed collateral safe, while losses near $25M and recovery efforts remain ongoing.
Resolv Labs confirmed a security incident on Sunday after attackers minted 50 million unbacked USR tokens through a contract exploit. The issue affected the token’s issuance system, not its collateral pool. According to the team, protocol functions were paused immediately while investigations and recovery efforts began to contain the breach.
Exploit Targets Minting Mechanism
The attack centered on USR’s minting logic, allowing abnormal token creation. Onchain investigator Ai9684xtpa reported that 100,000 USDC generated 50 million USR. This represents a 500 times amplification in minting output.
Additionally, security firm PeckShield stated that attackers minted another 30 million USR. However, Resolv Labs noted that underlying collateral remained intact. The team emphasized that no assets in the backing pool were lost during the incident.
Meanwhile, D2 Finance suggested multiple possible causes. These include oracle manipulation, compromised offchain signing, or missing validation checks.
Rapid Sell-Off Drives Depeg
Following the exploit, attackers quickly moved funds across protocols. According to D2 Finance, they swapped USR into USDC and USDT before converting assets into Ether. This sequence accelerated selling pressure across liquidity pools.
Consequently, USR lost its dollar peg within minutes. The token dropped to $0.257, marking a 74.2% decline. In some pools, prices fell as low as 2.5 cents due to slippage and liquidity strain.
Notably, USR reached this low point just 17 minutes after the initial minting event. The Curve Finance pool, its most active market, recorded intense trading activity during this period.
Recovery Efforts And Market Impact
Resolv Labs stated that containment and impact assessment remain top priorities. The team also aims to protect legitimate users while reviewing system vulnerabilities. Protocol operations remain paused as investigations continue.
Meanwhile, USR has partially recovered in price. It recently traded near $0.86, still below its intended $1 peg. D2 Finance estimated that attackers extracted approximately $25 million during the incident.The event follows a decline in crypto exploits earlier in February. However, this incident shows continued risks tied to smart contract vulnerabilities.
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