Liquity v2 Stability Pools Bleed $17M Amidst Mystery Threat

Liquity v2, a decentralized lending protocol, has experienced a significant outflow of over $17 million following a warning about its stability pools. According to DefiLlama, a data provider, the outflows primarily impacted the protocol's stability pools containing wstETH, WETH, and rETH. Liquity's total value locked has dropped from its all-time high of $84.9 million on Feb. 11 to $67.84 million.

On Feb. 12, Liquity v2 issued an urgent warning to users, advising them to withdraw funds from its stability pools. Shortly after, Ethereum staking giant Lido also issued a notice advising wstETH holders to remove their assets from Liquity v2's Stability Pool. Neither Liquity nor Lido disclosed specific details about the underlying threat. The immediate market reaction to these notices led to the ongoing withdrawals.

The warning from Liquity v2 comes as the protocol continues to investigate a potential threat. The outflows have primarily affected the protocol's stability pools, with Liquity v1 remaining unaffected and showing no signs of similar withdrawals. The total value locked in Liquity has decreased, reflecting the impact of the outflows on the protocol.

The ongoing investigation into the potential threat has raised concerns among users, leading to the significant outflows. As the situation develops, users are advised to monitor official Liquity channels for updates. The decentralized finance (DeFi) community awaits further information from Liquity and Lido regarding the underlying issue and its potential impact on the broader DeFi ecosystem.