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Liquity v2 recorded $17 million in outflows after advising users to exit Stability Pools amid an internal investigation into a potential issue.
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Ethereum-based decentralized borrowing protocol Liquity recorded over $17 million in outflows in 24 hours after advising users to exit positions from its recently launched Liquity v2 Stability Pools.
On Feb. 12, Liquity announced that it was running an investigation on its v2 earn pools for a “potential issue,” without revealing further details. Liquity v2 launched on Jan. 23, introducing user-set rates for borrowing.
Source: Liquity Protocol
While the internal review is ongoing, Liquity assured users that all trade operations remain unaffected, including redemption of Bold (BOLD) tokens, withdrawal of collateral assets and staking services:
“The protocol continues to work as expected, and to the team’s knowledge, the potential issue has not impacted any users.”
Related: Lido v3 debuts institutional staking upgrade as US awaits staked ETH ETF
Taking preemptive measures to avoid loss of funds
The Liquity protocol asked users to close their positions on v2 “out of an abundance of caution.” Additionally, investors were asked to use previous frontends and to be wary of scam attempts:
“Liquity V2 is fully permissionless, and the Liquity team does not maintain any administrative roles over the Liquity protocol. It is each user’s own responsibility to take appropriate actions when interacting with the Liquity protocol.”
Liquity Protocol did not respond to Cointelegraph’s request for comment.
Record outflows from Liquity Protocol
Following the call for exiting positions, Liquity v2 lost over $17 million in outflows, according to DefiLlama data.
Additionally, the total value locked (TVL) on Liquity v2 (LQTY) dropped 18% to $69.6 million from its all-time high of $84.9 million on Feb. 11.
Still, Liquity v1 showed no impact in terms of investment outflows amid the confusion.
Liquity v2 tokens breakdown. Source: DefiLlama
The Liquity v2 pool comprises three tokens — Rocket Pool ETH (RETH), Wrapped Ether (WETH) and Wrapped Lido Staked Ether (WSTETH).
Out of the lot, WSTETH outflows amounted to about $11.3 million, while RETH and WETH contributed $1.2 million and $4.5 million, respectively, in outflows.
Ethereum-based liquid staking platform Lido also notified wstETH holders to withdraw their investments from Liquity v2 Stability Pool (“Earn”).
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This article first appeared at Cointelegraph.com News
