Don't want to trade it yourself?
Our desk runs DEX portfolios on profit share.
Defi Protocol Term Labs Loses $8.5M in Governance Exploit
NewsView Non-AMP
Defi Protocol Term Labs Loses $8.5M in Governance Exploit
The DeFi protocol Term Labs has suffered an estimated $8.5 million loss after an attacker gained control of its governance system and used it to drain several vaults. The attack did not break the protocol’s code. Instead, the attacker gained enough voting power to approve transfers of funds.
How Term Labs Exploit Happens
Blockchain security firm PeckShieldAlert noted that the attacker first built enough voting power to control four USDC strategy vaults and about 91% of the Ethereum Meta Vault. This gave the wallet enough power to pass its own proposals.
Once approved, the vaults followed those orders and moved their funds to the attacker’s wallet. This means the exploit was mainly a governance attack, rather than a normal smart contract hack.
The attacker reportedly used only 2 ETH from Tornado Cash to fund the wallets used in the attack.
The biggest concern is that the attacker did not need to find a broken line of code. Instead, they gained enough voting power to control the vaults. This shows that even audited DeFi protocols can face risks if their governance system is not well protected.
$8.5M Drained From Term Vaults
Furthermore, PeckShieldAlert reported that the attacker drained around 2,843 ETH, worth about $6.87 million, along with roughly $1.6 million in DAI. Earlier, about $1.68 million in USDC was reportedly swapped for DAI.
Around $8,5M lost due to an exploit on Term Finance
The stolen funds were moved to a wallet now holding most of the reported assets. Term Labs has confirmed that a governance exploit affected its vaults but said its investigation is still ongoing.
What Happens to User Funds Now?
Term Labs has not yet provided a full recovery plan or confirmed how much of the loss can be recovered.
Term Labs officially acknowledged the incident,
“We are aware of a governance exploit impacting Term vaults. We will share more details once it has been further investigated.”
This is also the protocol’s second major loss. In May 2025, Term Finance lost about $1.5 million because of an oracle decimal error during an upgrade, although those funds were later recovered.
Trust with CoinPedia:
CoinPedia has been delivering accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict Editorial Guidelines based on E-E-A-T (Experience, Expertise, Authoritativeness, Trustworthiness). Every article is fact-checked against reputable sources to ensure accuracy, transparency, and reliability. Our review policy guarantees unbiased evaluations when recommending exchanges, platforms, or tools. We strive to provide timely updates about everything crypto & blockchain, right from startups to industry majors.
Investment Disclaimer:
All opinions and insights shared represent the author’s own views on current market conditions. Please do your own research before making investment decisions. Neither the writer nor the publication assumes responsibility for your financial choices.
Sponsored and Advertisements:
Sponsored content and affiliate links may appear on our site. Advertisements are marked clearly, and our editorial content remains entirely independent from our ad partners.
Rizwan is an experienced Crypto journalist with almost half a decade of experience covering everything related to the growing crypto industry — from price analysis to blockchain disruption. During this period, he’s authored more than 3,000 news articles for Coinpedia News.
Recent Posts
- News
Four Reasons Why Ripple’s Brad Garlinghouse Wants the Clarity Act to Pass
Ripple CEO Brad Garlinghouse used a speech at the CFTC’s Innovation Advisory Committee meeting this…
- News
XRP Price Prediction: Breakout Above $1.55 Could Trigger Next Leg Up
XRP is holding above a critical support level following a recent liquidation-driven pullback, with several…
- News
Will Bitcoin Price Hit $100K and Above By Year-End?
Bitcoin is trading at $77,129.12, up 22.8% over the past week, as former Coinbase Head…
- News
South Korean Crypto Traders Return as Upbit Volume Explodes 273%
South Korean traders are returning to crypto as Bitcoin climbed to a three-month high of…
- News
Hyperliquid Surpass Pump.fun in Fees as HYPE Token Hits ATH
Decentralized derivatives platform Hyperliquid has overtaken Solana based meme coin launchpad Pump.fun in 24-hour fees.…
- News
Eric Trump Denies New Family Crypto Token Rumors as ‘Fraud’
President Donald Trump’s son Eric Trump has rejected viral claims that the Trump family is…
Source: coinpedia.org