Term Labs Recovers Fixed-Rate Positions After $8.5M Governance Attack

Term Labs has successfully recovered all fixed-rate loan positions affected by its August governance exploit. The final position was moved on Aug. 25, after the protocol took steps to prevent the positions from redeeming into the same vaults that had been captured during the attack.

The attackers used malicious governance proposals to remove execution delays before draining liquid ETH and USDC from vault strategies. They created a counterfeit repo token priced against each strategy's exact liquid USDC balance, allowing them to sweep available funds.

Term Labs said its V1 and V2 contracts were not compromised, and its direct borrowing and lending markets remained operational throughout the incident. The protocol also noted that the attack was confined to liquid balances held inside Term vaults.