{"investigation":{"slug":"blizz-finance","entity_name":"Blizz Finance","trust_score":10,"severity_base":null,"score_modifier":0,"confidence":1,"status":"published","content_type":"investigation","summary":"Blizz Finance was a decentralized lending protocol on Avalanche, forked from Aave v2, that launched in November 2021 and was rendered insolvent in May 2022 when the Terra LUNA collapse triggered a Chainlink oracle circuit breaker that froze the LUNA price at $0.10 while the token's actual market price fell to near zero. Attackers exploited the stale price feed to borrow approximately $8.3 million in protocol assets using nearly worthless LUNA as collateral, draining the protocol entirely. The team announced permanent shutdown shortly after, recovering and distributing only approximately $1.5 million to affected users.","sections":[{"content":"Blizz Finance launched on November 8, 2021 on the Avalanche blockchain as a decentralized, non-custodial lending and borrowing protocol. The protocol was a direct fork of Aave v2 and adopted Aave's architecture with minor modifications to suit the Avalanche ecosystem. Users could deposit assets to earn yield and borrow against collateral in an overcollateralized fashion. The native token, BLZZ (contract address 0x0f34919404a290e71fc6A510cB4a6aCb8D764b24 on Avalanche), was distributed entirely through liquidity mining with stakers and lockers sharing 50% of protocol revenue. Blizz integrated Chainlink Price Feeds as its oracle solution for determining collateral valuations and borrowing rates. By early 2022 the protocol reported a market size that reached approximately $3 billion in cumulative volume and had attracted over 10,000 token stakers, though TVL at the time of the collapse was approximately $8.3 million. The founding team's identities were not publicly disclosed and no security audits were referenced in the launch announcement.","heading":"Background","sources":[{"url":"https://medium.com/@blizzavax/launch-announcement-blizz-finance-9a8a7f374588","name":"","type":"other","credibility":3},{"url":"https://blockchainreporter.net/blizz-finance-integrates-chainlink-price-feeds-to-help-secure-decentralized-money-markets-on-avalanche/","name":"","type":"other","credibility":3},{"url":"https://defillama.com/protocol/blizz-finance","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"On May 12, 2022, the Terra ecosystem began its terminal collapse. LUNA, which had traded at an all-time high of approximately $120, fell to fractions of a cent within days. Blizz Finance had accepted LUNA as collateral; approximately $1.5 million in LUNA holdings represented roughly 25% of the protocol's assets prior to the exploit. As LUNA's market price disintegrated, the Chainlink price feed used by Blizz ceased updating at a floor of $0.10 — far above the token's real market value. Attackers purchased enormous quantities of LUNA on the open market at prices far below $0.10 and deposited them as collateral into Blizz Finance. Because the protocol's oracle still valued that LUNA at $0.10, borrowers were able to drain all lendable assets in the protocol at a massive discount. Venus Protocol on Binance Smart Chain suffered a parallel attack resulting in approximately $13.5 million in bad debt; Blizz Finance was drained of approximately $8.3 million. Unlike Venus Protocol, which had a large enough TVL and operational levers to suspend activity before being completely depleted, Blizz Finance was wiped out entirely before any protective action could be taken.","heading":"LUNA Collapse Impact","sources":[{"url":"https://rekt.news/venus-blizz-rekt","name":"","type":"other","credibility":3},{"url":"https://crypto.news/terra-luna-defi-blizz-financend-venus-protocol/","name":"","type":"other","credibility":3},{"url":"https://thecryptobasic.com/2022/05/13/blizz-finance-depleted-after-luna-feeds-pause-fingers-pointed-at-chainlink/","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"The technical root cause of the Blizz Finance insolvency was a Chainlink oracle circuit breaker mechanism known as a minimum price floor (minAnswer). Chainlink aggregator contracts contain hardcoded minimum and maximum price bounds; when an asset's market price falls below the minAnswer threshold, the aggregator stops updating and continues to report the floor price rather than the live market price. For LUNA, this floor was set at $0.10. As LUNA's market price collapsed far below that level, Chainlink paused price feed updates. Blizz Finance's oracle smart contract code — inherited directly from the Aave v2 fork — contained no logic to detect or handle this scenario. According to the team's post-mortem, they were entirely unaware of the minimum price circuit breaker and stated the behavior was not documented in Chainlink's public documentation. The team acknowledged they had received some advance notification from Chainlink that the oracle would pause, but did not receive or process this warning in time to take protective action. The team noted that even had they been aware, the protocol's governance timelock would have delayed any emergency pause of the LUNA market, making a rapid response structurally impossible. The incident contributed to a broader industry awareness of the minAnswer vulnerability in Chainlink-integrated DeFi protocols, which has since been cited in numerous subsequent smart contract security audits as a known failure pattern.","heading":"Oracle Failure","sources":[{"url":"https://medium.com/@blizzfinance/blizz-finance-post-mortem-2425a33fe28b","name":"","type":"other","credibility":3},{"url":"https://medium.com/arbitrary-execution/circuit-breakers-a-chainlink-deep-dive-52b6f5b8c1e","name":"","type":"other","credibility":3},{"url":"https://rekt.news/venus-blizz-rekt","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"The exploit resulted in approximately $8.3 million being drained from Blizz Finance's liquidity pools. All lendable assets were removed by attackers exploiting the stale LUNA price, leaving depositors unable to withdraw their funds. The team noted in their post-mortem that a significant portion of the stolen assets belonged to team members themselves, indicating the developers also suffered material personal financial losses. Depositors across all supported assets suffered losses as borrowed funds were not repaid and collateral (LUNA) held by the protocol was effectively worthless at market prices. The protocol entered a state of permanent insolvency — liabilities exceeded the value of all remaining collateral. The BLZZ governance token, which had been distributed to incentivize protocol usage, became functionally worthless following the shutdown announcement. Users who had staked or locked BLZZ in anticipation of revenue sharing received no further distributions.","heading":"User Losses","sources":[{"url":"https://rekt.news/venus-blizz-rekt","name":"","type":"other","credibility":3},{"url":"https://medium.com/@blizzfinance/blizz-finance-post-mortem-2425a33fe28b","name":"","type":"other","credibility":3},{"url":"https://crypto.news/terra-luna-defi-blizz-financend-venus-protocol/","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"Following the exploit, the Blizz Finance team announced a limited recovery effort. Approximately $1.5 million worth of LUNA tokens that had been held by the protocol prior to the attack were identified as recoverable and earmarked for distribution to depositors. The team stated these funds would be distributed using a snapshot taken before the attacks began, subject to timelock delays in the smart contract. On May 15, 2022, the team confirmed the LUNA funds were in the process of being retrieved and would be distributed to Blizz depositors. The team also stated they were engaging with a Chinese-speaking community that claimed to have identified some of the attackers, though no further public disclosures about attacker identification or asset recovery from attackers were made. The $1.5 million in LUNA represented roughly 18% of the approximately $8.3 million lost, meaning the vast majority of user losses were uncompensated. The protocol was formally paused with no intention to resume operations; the team announced it would shut down its front-end interface and close official communication channels. No additional compensation fund, insurance coverage, or third-party reimbursement mechanism was announced.","heading":"Recovery Attempts","sources":[{"url":"https://threadreaderapp.com/thread/1525774839507832833.html","name":"","type":"other","credibility":3},{"url":"https://medium.com/@blizzfinance/blizz-finance-post-mortem-2425a33fe28b","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"Blizz Finance represents a case study in compounded protocol risk. Several distinct risk factors contributed to the total loss outcome. First, the protocol accepted a highly speculative and algorithmically-backed asset (LUNA) as collateral without implementing concentration limits or circuit breakers calibrated to an extreme depegging scenario. Second, the codebase was a direct fork of Aave v2 with no modifications to handle edge cases in the underlying oracle infrastructure, and the team conducted no apparent audit of oracle behavior under stress conditions. Third, the protocol's governance timelock — a security feature designed to prevent hasty or malicious changes — ironically prevented the team from pausing the LUNA market quickly enough to stop the drain once the oracle failure was detected. Fourth, reliance on a single oracle provider (Chainlink) without fallback pricing or circuit breaker logic at the protocol level left the system with no defense once the primary feed reported a stale price. Fifth, the anonymous team structure meant no public accountability existed post-incident. The protocol is now defunct with TVL at zero. The BLZZ token trades at effectively zero value. No on-chain activity has been recorded since the shutdown. The incident is cited as a canonical example of oracle manipulation risk in DeFi lending protocols and has influenced subsequent security standards for Chainlink integration in the industry.","heading":"Risk Assessment","sources":[{"url":"https://medium.com/@blizzfinance/blizz-finance-post-mortem-2425a33fe28b","name":"","type":"other","credibility":3},{"url":"https://rekt.news/venus-blizz-rekt","name":"","type":"other","credibility":3},{"url":"https://defillama.com/protocol/blizz-finance","name":"","type":"other","credibility":3},{"url":"https://github.com/code-423n4/2023-07-moonwell-findings/issues/195","name":"","type":"other","credibility":3}],"severity":"medium"}],"timeline":[{"date":"2021-11-08","event":"Blizz Finance launches on Avalanche as an Aave v2 fork with BLZZ token emissions beginning one hour after protocol launch.","source":""},{"date":"2022-05-12","event":"Terra LUNA price collapse begins. Chainlink's LUNA/USD price feed triggers its minimum price circuit breaker, freezing reported price at $0.10 while market price falls to near zero.","source":""},{"date":"2022-05-12","event":"Attackers begin depositing large quantities of LUNA (purchased at near-zero market prices) as collateral valued at the stale $0.10 oracle price, systematically borrowing all available liquidity across Blizz Finance pools.","source":""},{"date":"2022-05-12","event":"Protocol is drained of approximately $8.3 million in total liquidity before the team can invoke any pause mechanism. The governance timelock prevents an emergency response.","source":""},{"date":"2022-05-13","event":"Blizz Finance publicly acknowledges the exploit. Team states the protocol was drained 'before we could pause due to our timelock' and blames Chainlink's undocumented minimum price behavior.","source":""},{"date":"2022-05-13","event":"Rekt.news and multiple crypto news outlets publish coverage of the Blizz Finance and Venus Protocol exploits, attributing combined losses of over $21 million across both protocols.","source":""},{"date":"2022-05-14","event":"Blizz Finance publishes official post-mortem on Medium, detailing the Chainlink circuit breaker failure, the Aave v2 fork's lack of protective logic, and the team's unawareness of the minAnswer mechanism.","source":""},{"date":"2022-05-15","event":"Team announces permanent shutdown of the protocol, front-end, and official communication channels. Announces $1.5 million in recovered LUNA will be distributed to depositors via pre-attack snapshot.","source":""},{"date":"2022-05-15","event":"Team states they are engaging with a community that has allegedly identified some attackers, though no further public updates on attacker identification or additional asset recovery are made.","source":""}],"sources_used":[{"url":"https://medium.com/@blizzavax/launch-announcement-blizz-finance-9a8a7f374588","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://blockchainreporter.net/blizz-finance-integrates-chainlink-price-feeds-to-help-secure-decentralized-money-markets-on-avalanche/","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:not-found","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://defillama.com/protocol/blizz-finance","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://rekt.news/venus-blizz-rekt","name":"","type":"other","archive_url":"http://web.archive.org/web/20260517235555/https://rekt.news/venus-blizz-rekt","credibility":3,"archive_timestamp":"2026-05-17T23:55:55+00:00"},{"url":"https://crypto.news/terra-luna-defi-blizz-financend-venus-protocol/","name":"","type":"other","archive_url":"http://web.archive.org/web/20260511020923/https://crypto.news/terra-luna-defi-blizz-financend-venus-protocol/","credibility":3,"archive_timestamp":"2026-05-11T02:09:23+00:00"},{"url":"https://thecryptobasic.com/2022/05/13/blizz-finance-depleted-after-luna-feeds-pause-fingers-pointed-at-chainlink/","name":"","type":"other","archive_url":"http://web.archive.org/web/20260608050257/https://thecryptobasic.com/2022/05/13/blizz-finance-depleted-after-luna-feeds-pause-fingers-pointed-at-chainlink/","credibility":3,"archive_timestamp":"2026-06-08T05:02:57+00:00"},{"url":"https://medium.com/@blizzfinance/blizz-finance-post-mortem-2425a33fe28b","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://medium.com/arbitrary-execution/circuit-breakers-a-chainlink-deep-dive-52b6f5b8c1e","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://threadreaderapp.com/thread/1525774839507832833.html","name":"","type":"other","archive_url":"https://web.archive.org/web/20260830044236/https://threadreaderapp.com/thread/1525774839507832833.html","credibility":3,"archive_timestamp":"2026-08-30T04:42:36+00:00"},{"url":"https://github.com/code-423n4/2023-07-moonwell-findings/issues/195","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null}],"source_tags":["defillama"],"addresses":[],"reviewed":false,"reviewed_by":null,"model_used":"claude-sonnet-4-6","created_at":"2026-05-04T02:54:49.426229+00:00","updated_at":"2026-08-30T05:14:13.391919+00:00"}}