Term Labs Suffers $8.5 Million Loss: 2,843 ETH Found in Attacker’s Address

Approximately $8.5 million worth of funds were lost in a governance attack targeting Term Labs vaults; 2,843 ETH and 1.6 million DAI were reportedly found in the attacker’s address.

The smart contract pools holding user funds for the DeFi lending protocol Term Labs were drained by exploiting the protocol’s governance mechanism. These vaults function as fund pools where users deposit assets used in lending transactions. According to information shared by Wu Blockchain, PeckShieldAlert, and CertiK Alert, the attack occurred today.

A governance exploit means the attacker abused decision-making authority within the protocol to redirect the movement of assets in the vaults to their own advantage. This method can simultaneously affect multiple pools where user funds are held. Initial on-chain calculations recorded approximately 2,843 ETH along with 1.6 million DAI in the attacker’s address. The total loss was calculated to be approximately $8.5 million.

Attacker’s address was funded via Tornado Cash

On-chain transaction records shared by PeckShieldAlert showed that, in addition to approximately 2,843 ETH, 1.68 million USDC was withdrawn. The post stated that this USDC amount was swapped for approximately 1.68 million DAI, and the DAI is being held in the address under the attacker’s control. Thus, it was observed that a portion of the stolen assets was converted into a different stablecoin after the attack.

It was reported that the attacker’s address was initially funded with 2 ETH via Tornado Cash. This transfer was recorded as the first funding activity of the address prior to the attack. Term Labs announced that they are continuing their investigation into the incident and will share more details regarding the review.