📰 Table Of Contents
Prisma Finance Recovery Strategy Post-Hack
Prisma Finance has unveiled a strategy to cautiously restart operations following a hack that resulted in a loss of $11.6 million and prompted a temporary pause of the platform on March 28.
Reinstating Borrowing Capabilities
Reinstating borrowing capabilities on Prisma hinges upon achieving consensus through an ongoing community vote.
Exploitation Incident and Governance Response
On March 28, the decentralized finance (DeFi) protocol Prisma Finance was exploited to steal around $10 million worth of cryptocurrencies. The exploit at Prisma Finance was executed through a flaw in the migration zap contract, leading to a loss of approximately $11.6 million.
This contract was intended to manage transitions between trove managers but was manipulated to extract assets, including wrapped-staked Ethereum (wstETH). The stolen assets were swiftly converted to Ethereum (ETH), complicating efforts to track and recover the funds.
Emergency Pause and Governance Vote
Prisma Finance enacted an emergency pause on all trove managers in response to the breach. This action has halted all borrowing activities and prevented new liquidity from being introduced into the protocol, aiming to stabilize the situation. The Prisma Finance DAO subsequently launched a four-day governance vote the next day, which will end on April 7.
Plans for Resuming Borrowing Activities
On April 3, core contributor Frank Olson presented a plan to “safely” unpause the Prisma protocol, thereby reinstating functionalities such as the ability for users to deposit liquid staking tokens (LSTs) and liquid restaking tokens (LRTs) and borrow overcollateralized stablecoins.
Olson addresses the significance of unpausing the protocol, stating that the action is pivotal for the recovery process and reinstating normal operations, including complete Vault management and deposits into the Stability Pool.
Proposed Measures for Addressing the Exploit
To address the exploit, Prisma Finance has proposed several key measures. Firstly, there will be a significant reduction in protocol-owned liquidity (POL) by decreasing the weekly POL amount from $40,000 to $0. Additionally, the distribution to stakeholders will be impacted, with the weekly amount allocated to vePRISMA holders halved from $160,000 to $80,000.
Frank highlighted that these proposed changes are not intended to be permanent but are deemed necessary now.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
