Venus Protocol Hit by THE and CAKE Liquidation Cascade

• A wallet that received 7,447 ETH from Tornado Cash triggered liquidations in THE and CAKE on Venus.
• The wallet used ETH on Aave to borrow $9.9M, then built a large THE position on Venus.
• The event left $2.15M bad debt on Venus while the attacker gained about $5.07M in profit.

A complex DeFi trade on BNB Chain triggered a sharp liquidation cascade across THE and CAKE markets on Venus Protocol. On-chain data shows a wallet that previously received 7,447 ETH worth about $16.29 million from Tornado Cash, moved the funds before the event.

How the Trade Was Built

Blockchain analysts traced the activity to a wallet beginning with “0x7a7”. The address first received 7,447 ETH, valued at nearly $16.29 million, from Tornado Cash. The funds were then placed on Aave as collateral.

Using that collateral, the wallet borrowed about $9.92 million in stablecoins. The funds were then used to build a large position in THE, the token tied to the THENA ecosystem on BNB Chain.

Onchain Lens reported that the wallet pushed the price of THE higher on a centralized exchange before moving to DeFi lending markets. A separate address later supplied around 8.81 million THE tokens worth about $2 million to the Venus isolated pool.

Against that collateral, the wallet borrowed several liquid assets, including about 2.46 million CAKE worth roughly $3.5 million, small amounts of BTCB and BNB, and additional tokens across the protocol.

Liquidation Trigger Hits Venus

The strategy relied on THE holding its inflated market value. Once the price dropped, the lending position became unstable.

Roughly forty minutes after the borrowing activity, THE collapsed sharply. On‑chain data shows the token price falling close to 80% in minutes. The health factor of the Venus position fell to 0.30, far below the 1.0 level required to avoid liquidation.

The cascade left Venus Protocol with about $2.15 million in bad debt. Roughly 1.18 million CAKE and 1.84 million THE remained unpaid inside the lending pool.

Blockchain records show the attacker’s wallet still holds assets that include around 1.5 million CAKE worth about $2.15 million, about 20 BTCB worth $1.43 million, and close to 200 WBNB valued at $131,560. Together, the assets total roughly $3.7 million at current prices.

Analysts estimate total gains tied to the operation may reach about $5.07 million once related trades are included. Many observers believe the largest profit likely came from short positions on centralized exchanges placed before THE crashed.

Venus Protocol later confirmed unusual activity in THE and CAKE markets. In response, the protocol froze collateral on several smaller lending pools while risk controls were reviewed.

Collateral factors were reduced to zero for assets such as Bitcoin Cash, Litecoin, Uniswap, Aave, Filecoin, and Trust Wallet Token. The change targeted markets with low liquidity or high collateral concentration.

Related: Solv Protocol Confirms Limited BRO Vault Exploit as 38 SolvBTC Is Drained