Venus Protocol Faces $2M Bad Debt After THE Token Price Exploit

Venus Protocol bad debt exploit concerns are back in focus for Southeast Asian DeFi users after reports tied a THE token price manipulation incident to roughly $2 million in protocol losses, although an official postmortem confirming that figure was not accessible in the available research.

The available evidence confirms that THE was an official Venus-listed asset on BNB Chain. A Venus community governance and risk-analysis post published on January 17, 2025 supported listing THE on the protocol’s BNB Chain Core Pool and described THENA as a trading and liquidity hub on the network.

What remains unconfirmed from the accessible research is the core loss figure in the headline. No official Venus, THENA, Chaos Labs, or security-firm postmortem was available here to verify that the protocol was left with roughly $2 million in bad debt or to document the precise attack path.

Why this looks like a collateral pricing problem, not a generic drain

The headline framing matters because it points to THE token price manipulation rather than a broad smart-contract exploit. In lending markets, that usually means the risk comes from distorted collateral values, liquidation assumptions, or both, instead of funds being directly drained from the protocol treasury.

In plain terms, bad debt appears when borrowers can extract more value than their collateral can realistically repay once prices normalize. If a token’s quoted price is pushed higher than the market can support, positions can become undercollateralized and the lending venue may absorb the shortfall after liquidations fail to close the gap.

That distinction is important for Venus users across Southeast Asia, where BNB Chain products remain widely followed by retail DeFi traders. A reported bad-debt event signals balance-sheet damage at the protocol level, not just losses isolated to one trader who took a bad position.

Why Venus Protocol could end up holding the loss

Venus has said its Resilient Oracle is designed to reduce manipulation risk by combining multiple price sources and fallback checks. If the reported THE-linked incident is later confirmed, the main question will be whether the weakness came from the oracle path itself, market liquidity around the token, or risk parameters tied to listing and collateral settings.

That matters because a manipulated or thinly traded asset can create losses even when a protocol has standard liquidation logic. If the market cannot absorb forced selling at the quoted valuation, the system can end up with uncovered borrowing after positions unwind.

Venus has published incident analysis before. In a separate December 10, 2023 oracle incident write-up, the protocol disclosed a shortfall of about $274,000, which shows that Venus has historically documented losses when enough verified information was available.

That earlier disclosure is relevant because it suggests the current THE-linked claim should be treated as preliminary until a similar governance post, remediation plan, or transaction-backed explanation appears. Without that documentation, naming an attacker, root cause, or recovery path would go beyond the evidence on hand.

THE market activity shows why thinner DeFi assets can raise lending risk

The only directly accessible market snapshot in the research came from THE’s CoinGecko page, which showed the token at about $0.2781 with a 16.1% 24-hour gain, roughly $34.3 million in market capitalization, and about $21.5 million in daily trading volume at crawl time. Those figures do not prove the exploit claim, but they show the token was moving sharply enough to keep risk teams and traders on alert.

What risk managers usually watch after this kind of report

For lending protocols, three controls usually matter most after a reported price-manipulation incident: oracle construction, spot-market liquidity, and conservative collateral parameters. If any one of those is weaker than expected, a volatile token can produce liquidations that look adequate on paper but still leave unrecovered debt.

That is the practical lesson for exchanges and DeFi communities in Indonesia, Singapore, Thailand, the Philippines, and Vietnam that monitor BNB Chain activity. The immediate issue is not whether THE can rebound in price, but whether lending venues are using safeguards strong enough to keep local users from inheriting protocol losses through stressed markets.

What Southeast Asian traders should watch next

The next meaningful confirmation would be an official Venus or THENA statement, a governance proposal quantifying the deficit, or explorer-linked evidence tracing how the alleged manipulation translated into unrecoverable borrowing. Until then, the strongest verified facts are that THE was listed on Venus and that the protocol has previously acknowledged oracle-related losses when incidents were fully investigated.

For Kanalcoin readers, that makes this a risk-control story more than a token-price story. If the roughly $2 million number is later confirmed, the pressure will likely fall on DeFi lenders to revisit listing standards, liquidity thresholds, and oracle protections for assets that can move sharply on relatively shallow markets.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The reported roughly $2 million bad-debt figure had not been independently confirmed in the accessible source set at the time of writing.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.