Term Finance has already recovered well over $1 million. This follows an unfortunate oracle misconfiguration that lost millions on the critical newbie maker’s Treehouse (tETH) market due to ETH troubles. The attack, which reportedly took place on Saturday, led to loss of about $1.6 million worth of ETH at origination. The Term Finance team moved quickly to reduce a lot of that harm. From here on out, it’s up to the protocol treasury to absorb those losses.

At lightning speed, the team got to work. They explained to the community that the incident was not a hack and that user funds were not specifically targeted. StorySource Term Labs posted ongoing length recovery updates on X (formerly Twitter), bringing the community along on their progress.

Recovery Efforts and Outcomes

The first in-depth impact of the oracle issue was 918 ETH. However, through internal captures and negotiated returns, Term Finance was able to reclaim nearly three quarters of the lost funds.

Term Finance was able to internally pre-sell a total of 223.197 ETH, or ~$400,000. Additionally, the recovery team was able to negotiate the return of 333 ETH, which is worth approximately $600,000.

All told, Term Finance was able to recover 556.197 ETH showing the impact of utilizing rapid response and recovery strategies. These proactive efforts do go to show what the team is doing to minimize the financial impact on the protocol and its users.

Addressing Remaining Losses

While more than $1 million was ultimately recovered successfully, an unrecovered loss of 362.03 ETH, or about $650k at the time, still existed. Term Finance has assured the community that this last shortfall will be completely covered by the protocol’s treasury.

This decision demonstrates Term Finance’s focus on providing an assured financial platform. It protects users from the consequences of the oracle misconfiguration. By utilizing the treasury, Term Finance aims to absorb the financial shock and maintain confidence in the protocol's long-term viability.

Moving Forward

Term Finance is committed to transparency and continuous improvement. Term Labs has committed to the community that a full post-mortem analysis over the incident will be available in the coming days.

"This was not a hack. No smart contracts were exploited, and user funds were not directly targeted." - Term Labs

This report will unpack what happened during the oracle misconfiguration. The post it’s about what we learned and the protocol changes that we will be making to ensure that similar incidents never happen again.

"A full postmortem detailing the event, lessons learned, and protocol improvements will be published shortly." - Term Labs