Term Finance Recovers $1 Million After Oracle Error Causes $1.6 Million ETH Loss
Key Takeaways:
- Term Finance recovered over $1 million from the $1.6 million loss caused by an oracle misconfiguration.
- The team will cover the remaining $650,000 loss from the protocol treasury and release a post-mortem.
- Impermax Finance also suffered a $150,000 flash loan attack during the same weekend.
Over the weekend, Term Finance, a fixed-rate lending protocol on Ethereum, faced a critical oracle misconfiguration that led to significant ETH losses. However, swift recovery efforts have salvaged a large portion of the lost funds.
Read More: Bybit Suffers Massive $1.4 Billion Hack: What You Need to Know
Major Oracle Error Hits Term Finance
Term Finance announced that it lost approximately $1.6 million worth of ETH on Saturday due to an oracle configuration error affecting its Treehouse (tETH) market. Faulty liquidations triggered by the incorrect oracle update caused the loss of 918 ETH.
An update on our ongoing recovery efforts after yesterday’s oracle issue:
The total outstanding loss is now 362.03 ETH (~$650K) — significantly reduced from the original 918 ETH impact.
Of the original loss:
223.197 ETH was captured internally,
333 ETH was successfully…— Term Labs (@term_labs) April 27, 2025
The project quickly addressed the issue, stating:
“This was not a hack. No smart contracts were exploited, and user funds were not directly targeted.”
The cause was isolated to an updated ETH oracle that malfunctioned, rather than any external attack or vulnerability in Term’s smart contracts. Although the initial incident sparked security concerns, no user wallets were specifically targeted or drained.
The team moved swiftly to recover funds:
- 223.197 ETH (approximately $400,000) was captured internally.
- 333 ETH (approximately $600,000) was successfully negotiated for return.
This brought the total recovered amount to 556.197 ETH, leaving an outstanding loss of 362.03 ETH (~$650,000).
Recovery and Next Steps
Covering Remaining Losses
Term Finance confirmed that the remaining $650,000 loss will be fully covered by the protocol’s treasury. Borrowers have already been reimbursed, and lenders will be able to redeem their investments at maturity as usual.
In an update posted on X (formerly Twitter), Term Labs assured users:
“A full postmortem detailing the event, lessons learned, and protocol improvements will be published shortly.”
The swift action by Term Finance appears to have restored some community confidence. Transparency and prompt recovery efforts are essential, especially at a time when DeFi security incidents are rising.
Impermax Finance Flash Loan Attack
Another Weekend Setback for DeFi
While Term Finance managed to limit damage, another DeFi protocol was not as fortunate. Impermax Finance, a smaller Ethereum-based project, reported a flash loan attack on Saturday resulting in a loss of over $150,000.
The team from Impermax stated:
“Less than one hour ago, someone executed a flash loan and drained our V3 pools.”
Security firm TenArmor confirmed the attack and is working with Impermax to assess the full extent of the breach. The protocol plans to publish a detailed post-mortem once verification is complete.
Rising Wave of DeFi Incidents
The Term Finance and Impermax cases add to a growing list of DeFi incidents in 2024. Recently:
- Solana DeFi platform Loopscale lost $5.8 million in an exploit.
- Crypto exchange Bitget reported a $20 million loss after a manipulation involving a little-known token. Bitget stated it would pursue legal action against eight accounts believed to be responsible.
Read More: Bitget Investigates Suspicious VOXEL/USDT Trading Activity Following Sudden Price Spike
The pattern highlights the risks DeFi users face despite technological advancements. Notably, the types of vulnerabilities are expanding—ranging from traditional hacks to misconfigurations and sophisticated market manipulation.
Recovery rates from crypto exploits vary drastically. As seen in previous major attacks, once stolen funds move through mixers, peer-to-peer exchanges, or OTC trades, tracing and recovering them becomes extremely difficult. For example, Bybit’s CEO recently revealed that nearly 28% of funds lost in a major attack had “gone dark,” meaning they became untraceable on-chain.
Term Finance Focuses on Community Trust
Despite the setback, Term Finance has actively taken steps to maintain community trust by promptly capturing a significant portion of the funds, successfully negotiating the recovery of stolen ETH, committing to full reimbursement using treasury resources, and preparing a detailed post-mortem to enhance the protocol’s resilience.
The Term Finance incident stands out not because of the mistake itself—but because of the rapid, transparent response and emphasis on protecting users. In the volatile DeFi landscape, how a project reacts to a crisis can be more important than the crisis itself.
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