Zunami Protocol, a decentralized finance platform, issued a warning to its users against purchasing its Zunami Ether (CRYPTO: zETH) or Zunami USD UZD/USD stablecoins.
This came in the wake of a security breach on its "zStables" pools hosted on Curve Finance.
On Aug. 13, Zunami acknowledged the incident on X, formerly known as Twitter, stating, "Its stablecoin pools had encountered an attack."
The company assured users that the collateral is safe while it delves into the nature of the potential security lapse.
On-chain sleuth PeckShield approximated a loss of over $2.1 million from Zunami's Curve Pool, attributing the breach to a price manipulation glitch.
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The irregularity on Curve was first spotted by PeckShield on Aug. 13 at 10:47 UTC.
Zunami confirmed this discovery roughly 20 minutes post the initial detection.
Zunami Protocol operates as a decentralized revenue aggregator, enabling users to stake stablecoins to earn returns. Its most substantial stablecoin pools are hosted on Curve.
The recent breach has notably affected Zunami USD and Zunami Ether stablecoins.
Speaking about the security breach at Zunami Protocol, Fairside CEO Brandon Brown, a personal wallet theft protection firm, told Benzinga DeFi protocols continue to be prime targets for hackers due to the substantial funds locked in them and the industry's nascent state means regulations are still catching up, often allowing attackers to operate with anonymity.
"Many protocols lack thorough security audits and fail to maintain updated security practices, leaving them vulnerable to breaches," he said.
"Unfortunately, this is an issue of a developing industry that is still in somewhat of an infantile state — that’s why consumer protection tools like FairSide’s insurance alternative are so important if projects can’t secure users' funds, those users should at least be able to cover their funds from unfair loss."
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