RedStone co-founder Marcin Kazmierczak has refuted assumptions that its oracle was responsible for the $75 million loss from DeFi protocol Tectonic. Their oracle accurately recorded TONIC token prices and operated in line with the market pool conditions being monitored when the attack occurred.
Within a span of about 20 minutes, the attacker drove TONIC’s price up by 100x. Once its value surged, the perpetrator deposited the tokens into Tectonic as collateral to borrow other, significantly more liquid crypto assets. Researcher Weilin Li identified that roughly 364.6 trillion TONIC were utilized in this loan position. On paper, that volume of assets had to be valued at $375 million to back the $75 million withdrawal, given Tectonic applied a 20% collateral factor for the TONIC token.
Numbers on Screen Are Not Real Money
The platform’s point of failure lay in how it accepted loan collateral. Tectonic allowed manipulated prices to serve as collateral without testing how much TONIC supply could actually be liquidated on the market before its value collapsed. Kazmierczak noted that Tectonic’s design conflated two functions that should operate separately: reporting prices and validating that the valuation is safe to benchmark loans against.
Borrowing limits tied directly to available liquidity should have been the protocol’s primary safeguard. Tectonic could have also limited its loss exposure by implementing price impact limits, minimum market depth requirements, and dynamic collateral adjustments. Kazmierczak pointed out that using a longer time-weighted average price (TWAP) is not the right solution; a 100-fold price spike within minutes was already a clear warning sign that the asset was unfit to back large-scale borrowing.
A Recurring Pattern
Exploits targeting low-market-cap tokens have caused losses across other platforms as well. Less than a week earlier on August 27, Moonwell lost $8.7 million after a hacker used a similar tactic on the low-liquidity MAMO token. The most prominent case involved Mango Markets in October 2022, which lost over $100 million due to MNGO token price manipulation. Mango Markets exploiter Avraham Eisenberg was convicted before his conviction was later vacated in May 2025 due to jurisdictional issues.
As of writing, neither Tectonic developers nor Cronos network maintainers have released an official post-mortem detailing which risk controls were active when the exploit took place. For DeFi developers, these events offer a concrete lesson that on-paper asset valuations are meaningless when the market lacks sufficient buyers to absorb them.
Reported by crypto.news.
Also read: What Is DeFi (Decentralized Finance)?
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
