Reports have emerged that users of the decentralized finance (DeFi) app Pac Finance suffered losses of $24 million on April 11 due to a sudden parameter change made by a developer wallet. This information has been widely shared on social media and the app’s official Discord server. The team has been informed of the issue by the Discord admin, but as of now, no official announcement has been made regarding the incident.
Pac Finance is a crypto lending app that operates on the Blast network. It enables crypto holders to deposit funds and earn interest by lending their capital. To ensure repayment, the app only allows borrowers to take out loans up to a certain percentage of their collateral, known as the “loan-to-value ratio” (LTV). The development team is responsible for changing the LTV, but this is typically done after an announcement.
According to Blast network’s blockchain data, a developer wallet triggered a function on Pac Finance’s PoolConfigurator-Proxy contract at 1:06 am UTC on April 11, setting the LTV for Renzo Restaked Ether (ezETH) at 60%.
Smart contract developer Roffet.eth stated that this parameter change resulted in the liquidation of numerous ezETH leveraging farmers, as they were found to be in violation of the collateral rules for the protocol. Roffet criticized the change as “arbitrary” because it allegedly occurred without any warning.
Will Sheehan, the founder of Parsec Finance, also criticized the sudden change, noting that it seemed to have happened without warning. Sheehan estimated that borrowers lost approximately $24 million in collateral as their assets were automatically sold off to repay their loans due to this change.
In response to the wave of liquidations, Pac Finance users expressed their grievances and demanded answers on the protocol’s official Discord server. The team’s Discord moderator, Bountydreams, announced that they were trying to contact the team for an explanation. However, as of 7:55 pm, they claimed to have received no response.
Mass liquidations are a common issue for leveraged traders who borrow cryptocurrency or cash. However, they typically occur due to sudden price changes in a cryptocurrency, not because of protocol modifications. For example, leveraged Bitcoin traders experienced liquidations of over $165 million on April 2 due to a flash crash, and an additional $110 million in Bitcoin positions were liquidated on April 9 when the price unexpectedly rose.
This is an ongoing story, and further details will be provided as they become available.