DeFi in 2025: A Bumpy Ride
Unscrupulous cybercriminals manage to snatch $7 million from the Decentralized Finance (DeFi) platforms Loopscale and Term Finance.
The world of Decentralized Finance (DeFi) took another hit over the weekend, with two major protocols, Loopscale and Term Finance, losing a combined $7 million due to security breaches.
Loopscale Loses $5.8 Million in a Major Heist
On April 26, Loopscale, a DeFi platform based on Solana, reported a significant security breach impacting its USDC and SOL vaults. An attacker took advantage of under-collateralized loans, draining around $5.8 million—nearly 12% of the platform's total value. This attack occurred just two weeks after Loopscale's official launch.
Mary Gooneratne, Loopscale's co-founder, confirmed the attack. Investigations revealed the root cause to be an isolated issue in the platform'sRateX-based collateral pricing system. It's worth noting thatRateX itself was not compromised.
Following the breach, Loopscale temporarily halted all markets to assess the damage. The platform has since resumed partial operations, allowing key functions like loan repayments, top-ups, and loop closures, while vault withdrawals remain restricted. To recover the stolen funds, Loopscale offered a 10% bounty to the attacker and proposed a whitehat agreement.
Term Finance Suffers $1.5 Million Loss
On the same day, Ethereum-based Term Finance, a pioneer in scalable fixed-rate lending, also reported a security incident. A faulty update to its tETH oracle caused the problem, resulting in losses of about $1.5 million. However, no smart contracts were exploited, and the issue was contained within the tETH markets. Term Finance has committed to a full reimbursement plan for those affected.
These breaches add to the growing concerns about the vulnerabilities of DeFi platforms in 2025. In fact, crypto projects have seen close to $2 billion in losses this year, with high-profile incidents like the $1.46 billion hack on Bybit in February shaking confidence across the industry.
Some experts question whether DeFi returns justify the ongoing exploit risks. Tim Haldorsson, founder of Lunar Strategy, wonders if DeFi yields might lag behind traditional investments like bonds once hack-related losses are factored in.
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As DeFi continues to evolve, ensuring security and transparency will be paramount to regaining investor trust and building a secure future for this burgeoning sector.
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References:
[1] Loopscale Comms, Twitter, Loopscale security update, https://twitter.com/loopscaledefi/status/1517559249067672576
[2] Zooko Wilcox, Twitter, zksync exploiter posted a 1,722 ETH bounty, https://twitter.com/zooko/status/1514679594990794753
[3] CoinMarketCap, DeFi Platforms Total Market Cap, https://coinmarketcap.com/align/decentralized-finance/
[4] Loopscale Comms, Twitter, Reward for return of stolen funds, https://twitter.com/loopscaledefi/status/1518292894954114051
[5] Hodlomedy, Q1 DeFi Hacks & Thefts Summary, https://medium.com/hodlomedy/q1-defi-hacks-thefts-summary-2025-6d83da224f4d
- The DeFi protocol, Loopscale, remaining operational on the Solana blockchain, encountered a significant security breach on April 26, losing approximately $5.8 million.
- In a attempts to regain control, Loopscale temporarily halted all markets and offered a 10% bounty to the attacker for the returned stolen funds.
- Despite the attack, a quality assurance check revealed that RateX, the platform's collateral pricing system, was uncompromised.
- Several days later, another DeFi platform, Term Finance on the Ethereum network, reported a $1.5 million loss owing to a faulty update in its tETH oracle.
- Although Term Finance was impacted, no smart contracts were exploited, and the issue was contained within the tETH markets.
- Loopscale's co-founder, Mary Gooneratne, confirmed the attack, attributing it to an isolated issue in the RateX-based collateral pricing system.
- These security incidents have reinforced investor apprehensions about the vulnerabilities of DeFi platforms in 2025, with the sector experiencing close to $2 billion in losses this year.
- The year has seen a string of high-profile incidents, such as the $1.46 billion hack on Bybit in February, which have shaken confidence across the crypto-finance industry.
- Given the ongoing risks of exploits, some experts question whether DeFi returns justify the vulnerabilities in the sector.
- As DeFi continues to evolve, the emphasis on security and transparency in this burgeoning sector becomes increasingly essential for regaining investor trust and staying competitive in the ever- evolving world of technology and finance.
