$8.5M Drained from Term Vaults as Governance Delays Removed

Term Labs has shed new light on an August 23 vault exploit that drained roughly $8.5 million from its platform.

The attacker, who used Tornado Cash to fund their wallets, submitted proposals that removed governance delays, effectively preventing liquidity providers from intervening.

The first proposal, titled 'LP Veto', was submitted on August 17 and set the governance delay for a specific stack to zero, removing a seven-day window for LPs to act.

A second operator was funded through Tornado Cash on August 18 and deployed a contract that combined a controller, price adapter, and counterfeit repo token. The helper submitted seven proposals, including five that set their stack's governance delay to zero, removing a three-day window for LPs to react.

The first proposal was executed on August 23 at 06:25 UTC, recalling four live ETH strategies into a custom frWETH-EXIT contract, while the second campaign was executed at 06:47 UTC against five USDC strategy DAOs.