Why This Matters

• Users of More Markets face potential loss of funds if the protocol cannot recover the drained assets.
• The exploit highlights ongoing risks in DeFi lending protocols, particularly those using advanced features like E-mode and liquid staking tokens.
• The incident may prompt tighter security audits and parameter adjustments across similar protocols on Flow EVM and other chains.

Background

More Markets is a decentralized finance vault infrastructure protocol operating on the Flow blockchain. Lending reserves allow users to deposit assets and borrow against them, with collateralization rules enforced by smart contracts. Efficiency mode (E-mode) is a feature that allows higher loan-to-value ratios for correlated assets, which can be exploited if the protocol fails to properly price risk. The Ankr liquid staking token used in this attack is a derivative that represents staked assets, often used to generate yield.

Key Perspectives

Blockaid (Security Firm): Identified the exploit and issued a public alert, warning that the attacker used an Ankr liquid staking token and E-mode to overborrow from the mFlowWFLOW reserve. More Markets (Protocol): The protocol’s team has not yet publicly commented on the incident. The exploit represents a direct loss of approximately $9.3 million in user funds. Critics/Skeptics: Some DeFi observers may argue that the use of E-mode with liquid staking tokens introduces systemic risk, and that protocols should implement more conservative risk parameters or additional safeguards.

What to Watch

• Whether More Markets pauses or adjusts its E-mode and liquid staking token parameters.
• Any follow-up reports from Blockaid or other security firms detailing the full attack vector.
• Potential recovery efforts or compensation plans for affected depositors.