KAVA plunged nearly 50% on November 14 after attackers exploited a vulnerability in Kava Lend, draining approximately 55.2 million tokens from the lending protocol before moving most of the a
KAVA plunged nearly 50% on November 14 after attackers exploited a vulnerability in Kava Lend, draining approximately 55.2 million tokens from the lending protocol before moving most of the assets to BNB Chain for sale.
The stolen tokens were valued at approximately $3.76 million before the attack, although the subsequent selling generated substantially less. KAVA lost roughly half its value at its intraday low on BNB Chain as millions of tokens entered the market within a short period.
Kava confirmed the security incident was confined to Kava Lend, ruling out an infinite mint of new tokens. The underlying blockchain remained operational, while partner exchanges suspended deposits and withdrawals as a precaution.
The exploit targeted a largely inactive BUSD lending market, where attackers manipulated the protocol’s interest calculations to inflate their collateral value.
The vulnerability allowed the market’s supply interest index to increase approximately 243,000-fold within three minutes after its effective supply was reduced to an extremely small positive amount.
A deposit worth only a few thousand BUSD consequently appeared as approximately 1.26 billion BUSD in collateral, creating borrowing power unsupported by actual assets.
The attackers then executed 127 KAVA loans over approximately 98 minutes, repeatedly liquidating positions to clear outstanding debt without surrendering sufficient collateral.
The process bypassed the protocol’s borrowing limits, allowing approximately 55.2 million KAVA to be borrowed. After accounting for repayments of other users’ loans, the attacker-controlled wallets retained roughly 53.9 million tokens.
The onchain investigation traced approximately 49.2 million KAVA transferred to BNB Chain through LayerZero, with 48.4 million sold in 35 minutes for approximately $2.09 million.
The selling pushed KAVA down 36% during the initial liquidation period, with losses on BNB Chain reaching approximately 52% two hours after the selling began.
Another $612,416 in USDT linked to the proceeds was blocked during an attempted transfer through Relay. The bridge rejected the transaction under a wallet restriction, leaving the funds without a completed payout at the time of the investigation.
South Korean cryptocurrency exchanges Upbit, Bithumb and Coinone suspended KAVA deposits and withdrawals as the incident unfolded.
Bithumb halted transfers on November 14, while Coinone introduced similar restrictions, citing security concerns and the need to verify network stability before restoring services.
Kava also suspended withdrawals through the Axelar bridge. The precautionary shutdown affected cross-chain transfers through Axelar, although the stolen tokens had already exited through LayerZero.
The exploit resembles other recent lending protocol failures involving manipulated collateral calculations. In July, Bonzo Lend lost approximately $9.05 million after an attacker manipulated a pricing oracle on Hedera.
A separate Tectonic exploit on Cronos in August involved inflated TONIC collateral values, allowing attackers to borrow substantial amounts of more liquid assets.
Similarly, an Ankr liquid-staking contract vulnerability allowed unbacked tokens to be used as collateral against MORE Markets’ WFLOW reserves.
Kava has not announced a reimbursement plan for affected lenders or provided a timetable for restoring Axelar withdrawals. The team is continuing its investigation and has committed to publishing a complete incident report.
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