Crypto News – Many users of the decentralized finance network Pac Finance were severely impacted by a $26.8 million liquidation event that resulted from a dramatic turn of events. This sudden financial disruption that happened on April 11 has generated a lot of discussion among the cryptocurrency community.
Sudden Change in Pac Finance Protocol Causes $26.8 Million Liquidation
Pac Finance, which runs on the Blast network, enables investors in cryptocurrencies to deposit money and earn interest by making loans. By guaranteeing that borrowers only receive a certain portion of their collateral—referred to as the “loan-to-value ratio” (LTV)—the platform secures loans. To preserve market stability, any modifications to this key ratio are usually disclosed beforehand.
Blockchain data from Blast Network indicates that on April 11, at 1:06 am UTC, a developer wallet called a function on Pac Finance’s PoolConfigurator-Proxy contract, which set the LTV for Renzo Restaked Ether (ezETH) to 60%. However, the team’s Discord administrator asserts that they have informed the team of the issue.
Many Reactions to the Protocol Change
The ezETH leveraged farmers were liquidated as a result of this parameter modification, according to smart contract creator Roffet.eth, when it was discovered that these borrowers were now breaking the protocol’s collateral restrictions. Given that the parameter modification was purportedly made abruptly, Roffet referred to it as “arbitrary.”
Will Sheehan, the creator of Parsec Finance, also took issue with the modification, saying it seemed to come out of nowhere. Because of this modification, Sheehan calculated that borrowers lost about $24 million in collateral when their assets were automatically liquidated to repay their loans.
Leave a comment