Term Labs suffers a governance attack, with $8.5 million drained

Term Labs is the latest lending protocol to suffer an exploit. Vault governance rules meant an attacker was able to withdraw a total fo $8.5M in ETH and DAI. 

Term Labs is the creator of Term Finance, a decentralized lending protocol for fixed-rate ETH loans. Term Labs aimed to offer more predictable lending rates and boasted expertise from a traditional quant team of former Citibank and Morgan Stanley experts. 

Term Labs announced that the exploit affected some of its vaults, and the real impact is still estimated. 

We are aware of a governance exploit impacting Term vaults.

We will share more details once it has been further investigated.

- Term Labs (@term_labs) August 23, 2026

Initial data show the attacker did not use a malicious exploit, but instead only used their governance influence, as intended by the protocol. 

As of August 23, Term Labs holds over $25M in total value locked. The protocol carries $3.92M in active loans and a higher amount of collateral in its vaults. In total, Term Finance vaults held $12.25M, meaning the recent exploit almost completely drained the protocol’s lending capabilities. 

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