Original | Odaily Planet Daily

Author | Qin Xiaofeng

In the past few days, as the BNB cross-chain bridge hacker Venus' account positions began to be liquidated, external crypto KOLs began to focus on discussing the future trend of BNB. Pessimists believe that BNB may repeat the same mistakes and collapse like FTT, and even compared the historical trends of the two in a similar way, causing panic in the community. As shown below:

（KOL compares BNB and FTT prices）

The question is, how much selling pressure will the recent liquidation of BNB cause to the market? First of all, there is no big impact. The liquidation of BNB positions on Venus is all taken over by the BNB Chain team, and it will not be dumped into the market, let alone large-scale chain liquidations.

The incident started in October last year, when a hacker stole about 2 million BNBs by exploiting a vulnerability in the BNB cross-chain bridge "BSC Token Hub" - the price of BNB was $280 at the time, with a total value of about $560 million. The hacker then deposited 924,821 BNBs into the lending protocol Venus, borrowed about $152 million in stablecoins (including 116 million USDT and 36 million USDC) and transferred them to other chains.

After the incident, BNB Chain immediately released a new version, BSC v1.1.15, which can block activities related to hacker accounts. At the same time, the BNB Chain node program uses blacklists and pause functions to prevent the flow of stolen funds and potential attacks. In short, the assets in the hacker's wallet address (the remaining 1.02 million BNB and other stablecoin assets in the wallet) are restricted from transfer - to some extent, the wallet assets have been permanently frozen, and the hacker has only stolen more than 900,000 BNB.

(hacker wallet address assets)

At this point, the only headache for all parties is how to deal with the BNB assets that have been used as collateral in Venus? Direct zero-cost recovery and destruction means that Venus will have a huge deficit of 150 million US dollars, which Venus depositors obviously do not agree to; if the Venus protocol is allowed to operate on its own and automatically dumped into the market when the liquidation price is reached, the huge amount of BNB will lead to chain liquidations, further suppressing the price of BNB, which is also not in the best interests of Binance.

(BNB Chain community proposal)

In the end, Binance decided to bear the loss and proposed a proposal called VIP-79 in the Venus community and it was passed. The specific content is: the whitelist address controlled by the BNB Chain core team will be the only position liquidator to safely control this super-large BNB supply and avoid the direct occurrence of chain liquidation. In addition, Binance promised that the liquidated BNB will not be thrown into the market, but will be destroyed after being recovered.

At that time, the liquidation price of the BNB position of the Venus hacker address was about 220 USDT, and the BNB spot price was close to this point. BNB Chain then transferred 30 million USDT to the whitelist address as a backup liquidation fund to prevent the impact of short-term price plunges. Interestingly, in the following weeks, the BNB price began to rise, once reaching 400 USDT, and it was getting further and further away from the liquidation threshold, and the discussion about BNB liquidation selling pressure gradually decreased.

Until June 12 this year, the price of BNB continued to decline, approaching the liquidation line of $220 again, which attracted the attention of the crypto community. BNB Chain also immediately replenished $30 million in stablecoins to meet the challenge. This time, the price of BNB remained strong around $220 and began to rebound, avoiding liquidation again.

It was not until August 18, when the BTC price fell sharply and the BNB price finally broke through $220, that the BNB positions in the Venus hacker address began to be liquidated (the health coefficient was less than 1). On-chain data showed that on August 18, a total of 6.7431 million vBNB (Venus BNB) were liquidated, and the BNB Chain address paid a total of more than 30 million US dollars to recover about 140,000 BNB. At this time, the BNB liquidation price dropped to around $211, and there were 784,615 BNBs left in the hacker address. As shown below:

On the evening of August 21, the price of BNB fell below $211, triggering another liquidation, with a total of about $6.88 million of vBNB liquidated. The BNB Chain address once again paid more than $3,000 to recover about 156,200 BNB. As shown below:

As of now, the hacker account has 628,337 BNB remaining, and the health factor of the Venus account has returned to 1.07; according to estimates, the next round of liquidation price is about $199-the current BNB price is $213, which needs to fall by 6.5%. The account has a loan amount of about $94.21 million, and the break-even point between debt and collateral is about $150; in other words, as long as BNB remains above this price, Venus will not suffer financial losses.

（Venus hacker account）

Overall, in the past few days, BNB Chain has paid a total of US$60 million to recover 296,400 BNBs, with little impact on the market. The price of BNB has fallen from a low of US$220 to US$203, with a maximum drop of 7.7%. The current BNB price is only 3.1% lower than the US$220 on the 18th, while the BTC price is 2.3% during the same period.

However, under the stirring of some people, BNB seems to have become doomsday, or even the second FTT. In fact, the situation faced by Binance this time is completely different from that of FTX: FTX misappropriated assets and caused a gap of tens of billions of dollars, while Binance only cleared the $150 million hacker debt, and the whole process was transparent and open.

“I don’t understand why people are worried about this little $180 million liquidation. BNB is not some random garbage with 0 liquidity, Binance can handle this easily, they have handled bigger things in the past. I can understand the risk Venus faces, but I think Binance can easily handle nearly $200 million in liquidations or even destroy these tokens,” commented Abdul Rafay, co-founder of cryptocurrency investment platform Zignaly.