Term Labs Completes Fixed Rate Loan Position Recovery, No Impact on V1/V2 Contracts Found

Term Labs completed the final fixed rate loan position recovery on August 25 at 14:52 (UTC). Term Labs stated that the impact of the incident was limited to the liquidity assets held by Term Vault, while Meta Vault and related strategies remain closed. The team found no evidence that Term V1 and V2 contracts were attacked during the incident, and the direct lending market is operating normally, with supply, repayment, and liquidation functions unaffected. Technical analysis indicates that the attacker funded operational wallets through Tornado Cash and used governance proposals to set the governance delay time of multiple strategies to zero, bypassing the LP additional blocking window. Subsequently, they deployed fake controllers, price adapters, and counterfeit Repo tokens to manipulate strategy parameters and price mechanisms, siphoning off some ETH and USDC liquidity assets. Term Labs is collaborating with law enforcement and cybersecurity firms to investigate the identity of the attacker and has provided information to relevant authorities. The remaining low-activity Vault is being processed. Contracts related to fixed rate loans have been upgraded and migrated in advance to avoid the risk of redemption to affected Vaults after loan maturity.

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