Prisma Finance Takes Action to Recover from Hack, $540K Still at Risk
Prisma Finance is actively addressing a recent security breach that resulted in a loss of $11.6 million and is focusing on a recovery strategy.
According to a post on a forum by core contributor “Frank,” the decentralized finance (DeFi) protocol Prisma Finance has outlined its immediate response and future steps following the hack. Frank stated that $540,000 of the exploited funds are still vulnerable.
“Of the affected Troves, several have revoked the contract containing the vulnerability, with approximately $540k of collateral still at risk at the time of writing,” said Frank.
Prisma Finance’s Proposal
In response to the exploit, one key aspect of the strategy involves a significant reduction in protocol owned liquidity (POL), achieved by decreasing the weekly POL amount from $40k to $0.
Another measure focuses on the distribution to stakeholders. Frank explained the decision to cut the weekly amount allocated to vePRISMA holders in half. “We will reduce the weekly amount distributed to vePRISMA holders by half, from $160k to $80k,” he noted.
These proposed changes, according to Frank, are not permanent but are crucial for the time being. “As we receive new information about this situation, we will also commit to reviewing these parameter changes one week after their implementation,” he said.
$11.6 Million Hack Involving FixedFloat Exchange
The exploit at Prisma Finance was carried out through a flaw in the migration zap contract, resulting in a loss of approximately $11.6 million.
This contract was intended for managing transitions between trove managers but was manipulated to extract assets, including wrapped staked Ethereum (wstETH). The stolen assets were quickly converted to Ethereum (ETH), making it challenging to track and recover the funds.
The post stated that the core functionality of Prisma Finance remains unaffected. The issue was limited to a specific component, the migration zap contract, and did not compromise the entire protocol.
In response to the breach, Prisma Finance implemented an emergency pause on all trove managers. This action has halted all borrowing activities and prevented any new liquidity from entering the protocol, with the aim of stabilizing the situation.
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