MERL Minting Exploit: Deflationary Measures To The Rescue

Merlin Lab might be a newcomer in the DeFi space, but the yield aggregator hasn’t been spared in the recent onslaught on De-Fi protocols by unscrupulous individuals looking to exploit them.
These attackers are getting emboldened, and it showed in how they orchestrated the MERL minting exploit.

The MERL Minting Exploit Breakdown

Merlin Lab operates a unique concept, minting MERL tokens based on deposits into the vaults by users of the platform. Everyone knew this, including the attacker. So leveraging the ‘Get Reward code,’ an attacker proceeded to send a large number of CAKE tokens to the vault. This resulted in the minting of a sizeable amount of MERL tokens.

This exploit is coming days after Pancakebunny suffered a flash loan attack also on the BSC network. Merlin Lab did put out information confirming its protocol is safe against flash loan attacks. Yet, the excess MERL tokens minting exploit happened, putting doubts into the minds of many regarding the safety of the platform.

Merlin Lab Takes To Deflationary Measures

With excess MERL tokens minted due to the exploit, a massive price crash was expected. Fortunately, Merlin Lab rose to the challenge, rolling out plans to stem the slide of its native token into the abyss.
Several deflationary measures have been put in place. Here are some of these measures, and how they will help in maintaining a balance in MERL price despite the actions of the attacker:

  1. Token Buyback and burn
    For those familiar with decentralized finance protocols, token buyback and burning are quite commonplace. Since most of these platforms mint tokens continuously, they fall back on this deflationary approach to prevent a glut of their native token in the market. It impacts the price of the token, at least temporarily.
  2. Initially, Merlin Lab set buyback and burn events for later in the year, but the unexpected minting of MERL tokens called for a rejig of the platform’s roadmap. Surprisingly, the funds for this exercise aren’t coming from the platform fees, but the Development Team Funds will be used to make this happen. The choice of the team development funds for the exercise is something that will be applauded by investors, onlookers, and critics alike.

3. The lottery is coming
Though most De-Fi protocols consider their lottery as a use case, it’s merely a deflationary measure to rein in on the supply of their native token. Merlin Lab is bringing forward its lottery ahead of schedule. Of course, it’s happening sooner due to the MERL minting exploit.
During the Magical Merlin lottery going down soon, more users will get a chance to hope their lottery ticket matches the winning numbers. About 20% percent of the contributed tokens will be burned, driving down the circulating supply of MERL.


The MERL minting exploit serves as a teachable moment for both Merlin Lab and other De-Fi protocols. No one should rest on their laurels thinking they have everything under control, especially on a slippery slope like the De-Fi space.
It’s a good thing Merlin Lab has taken responsibility for the situation and put measures in place to speed up a return to normalcy.

For more information, you can follow Merlin’s global community:




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