The Venus Protocol temporarily paused operations after a phishing-related compromise and has resumed following a rapid governance response and on-chain recovery efforts. Quick intervention, an emergency governance vote and deep chain analysis enabled the protocol to recover most of the assets and restart services.
What happened
A very large holder approved a malicious transaction after a phishing attack, allowing an attacker to extract assets and collateral from Venus. The compromised approval enabled the attacker to take tokens and guarantees including BTCB, vUSDT, vUSDC, vXRP and vETH by liquidating the affected positions and leveraging the granted permissions.
Reported and actual impact
Initial reports estimated the loss at about $27 million, but after on-chain analysis and assessment of the borrower’s debt the recoverable damage was recalculated to around $13.5 million. Security teams and researchers reviewed the indebted position and tracked asset flows on-chain, which reduced the effective loss once liabilities and recoverable items were considered.
Immediate response and governance
The protocol halted platform activity immediately and called an emergency governance vote to authorize mitigation steps such as forced liquidations and freezing related addresses. Governance approved powers to sell assets, isolate affected accounts and coordinate recovery efforts, using decentralized decision-making to limit further damage.
Investigation and recovery
On-chain analysis and cooperation with trackers made it possible to trace fund movements and recover most of the stolen assets. Real-time inspection of transactions, identification of cash-out attempts and coordination with third-party trackers were crucial to securing funds and returning services to normal.
Root cause and security context
The breach arose from a compromised wallet and phishing rather than a protocol-level vulnerability in Venus smart contracts. Researchers highlighted that malicious approvals and social-engineering attacks remain primary risks for large holders, and that improvements such as EIP-7702 introduce better permission controls but still require careful user practices and developer attention.
Lessons and recommendations
The incident underscores that DeFi security requires both technical safeguards and user education, and that rapid, transparent governance can meaningfully limit damage. Users are advised to carefully review approvals and permissions before confirming transactions, separate funds across accounts, use cold wallets for large holdings, run continuous monitoring and education campaigns to detect phishing sites and malicious signatures, and maintain strict key management practices.
Venus’s swift shutdown, emergency governance actions and effective on-chain tracking allowed the protocol to recover most assets and resume operations while preserving decentralization principles. This episode highlights the ongoing need to strengthen permission management, on-chain monitoring and user awareness to reduce the impact of future phishing and whaling attacks.
