Ethereum DeFi Protocol Term Finance Loses $8.5M to Governance Attack

Term Finance, an Ethereum-based DeFi lending and borrowing protocol, was hit by another security breach on August 23rd. The attacker exploited a weakness in the DAO governance system to gain majority voting power, allowing them to drain approximately $8.5 million from users' vaults.

The hacker bought a significant portion of Term's governance token at a low cost, which gave them control over the protocol's vaults. They then used this access to approve malicious governance proposals and drain 2,843 ETH worth around $6.87 million, as well as 1.68 million USDC.

This is not an isolated incident for Ethereum-based protocols in 2026. A recent security report from Blockaid found that crypto theft and fraud losses exceeded $1 billion in the first half of this year, with Ethereum accounting for the largest share at approximately $332 million.