Crypto News– Pac Finance, a lending protocol built on the Blast network, has acknowledged that its liquidation threshold was altered without prior notice to its team, leading to substantial losses for users.
Pac Finance Shocks Users with Unforeseen Liquidation, Resulting in 26 Million Dollars in Losses
This incident reflects the persistent challenges encountered by DeFi protocols operating on the Ethereum layer-2 network, Blast. Just last month, Munchables, a web3 game operating on the same network, experienced a loss of over $62 million in an attack. Fortunately, the hacker voluntarily returned the stolen funds.
A 26 million Dollars liquidation event
On April 11th, Will Sheehan, the founder of Parsec Finance, reported a significant wave of ezETH liquidations on Pac Finance. Pac Finance offers users the opportunity to earn interest by depositing their crypto assets. To mitigate default risks, borrowers are subject to loans based on a predetermined percentage of their collateral, known as the loan-to-value ratio (LTV). Adjustments to the LTV are typically infrequent and announced by the development team prior to implementation.
However, on-chain data reveals that a developer wallet modified the LTV for Renzo and restaked ETH (ezETH) to 60%. This adjustment rendered several borrowers non-compliant with the collateral requirements, leading to the liquidation.
Notably, the majority of liquidations stem from a single user, resulting in a loss of $23.9 million.
Pac Finance’s Reaction
Pac Finance stated that it is in contact with affected users to develop a mitigation plan. The team also said it is working to prevent a repeat of the incident by setting up a framework where users are notified of every decision before it happens.
Aave founder Stani Kulechov commented on the situation, attributing the issue to a lack of knowledge of the codebase. Kulechov referred to Pac Finance as a fork of Aave, suggesting that the project uses Aave code as the basis of its platform.
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