Another DeFi Hack: Term Labs Loses $8.5 Million in Governance Exploit

DeFi lending protocol Term Labs lost roughly $8.5 million on Sunday after a governance exploit impacted its Term vaults, blockchain security firm PeckShield reported.

The attacker pulled 2,843 Ethereum (ETH) and 1.68 million USDC (USDC) out of the protocol. Term Labs confirmed the incident and said a fuller account would follow its investigation.

How the Term Labs Attacker Moved the Funds

PeckShield valued the ETH portion at $6.87 million and the stablecoin portion at $1.68 million. The attacker then swapped the USDC into roughly 1.68 million Dai (DAI).

The post highlighted that the wallet behind the attack was originally seeded with 2 ETH withdrawn from Tornado Cash. Mixer funding is a common precursor to onchain theft, since it breaks the link to an exchange deposit.

Term Labs runs fixed-rate lending through onchain auctions. According to DefiLlama, the vaults' total value locked stands at $12.2 million, with $8.6 million of that on Ethereum.

The team has not yet named the specific governance function the attacker abused.

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