Pac Finance users reportedly lost $24 million in collateral due to an unannounced change in loan parameters
According to various posts on social media and statements made on Pac Finance’s official Discord server, customers using the decentralized finance (DeFi) application Pac Finance experienced liquidations totaling $24 million on April 11 due to an abrupt alteration of settings by a developer’s wallet. An administrator on the team’s Discord server mentioned that they have alerted the team about the issue. Nonetheless, as of this report, the team has not communicated any official information about the event.
Pac Finance is a cryptocurrency lending platform operating on the Blast network. It provides a service where cryptocurrency owners can invest their assets to gain interest through lending. In order to guarantee that loans are paid back, the application restricts loan amounts to a certain proportion of the collateral provided by the borrower. This proportion is known as the “loan-to-value ratio” (LTV). While the development team has the authority to adjust the LTV, such changes are typically communicated to the users beforehand through an official announcement.
Based on information from Blast network’s blockchain records, at 1:06 am UTC on April 11, a developer’s wallet triggered an operation within Pac Finance’s PoolConfigurator-Proxy agreement that established the Loan-to-Value ratio for Renzo Restaked Ether (ezETH) at 60 percent.
Smart contract developer Roffet.eth states that there has been a modification to a specific setting. caused “The forced selling of a substantial group of ezETH borrowers who were using leverage,” as they have now been identified as breaking the collateral guidelines of the system. Roffet referred to the alteration of the parameters as “random,” claiming it was purportedly implemented without prior notice.
Founder of Parsec Finance, Will Sheehan, voiced his disapproval of the modification, alleging it was implemented “seemingly without prior notice.” According to Sheehan’s calculations, borrowers suffered a loss of around $24 million in collateral after their holdings were involuntarily liquidated to settle their loans resulting from the alteration.
Following a series of forced sell-offs, users of Pac Finance flocked to the platform’s official Discord channel to express their frustration and seek explanations. In reply, the Discord moderator for the team, known as Bountydreams, made it known they were trying to reach out to the team for clarification. As of 7:55 pm, they reported that they had not yet received any reply.
Large-scale sell-offs often occur among traders who use leverage, meaning they take loans in cryptocurrency or fiat money to trade. These liquidations typically result from abrupt shifts in cryptocurrency prices rather than updates or modifications to the underlying protocols governing those cryptocurrencies. On April 2nd, traders employing leverage to trade Bitcoin faced this issue. Disposed of for a sum over $165 million. On April 9, during an abrupt market plunge, an additional $110 million worth of positions in Bitcoin were liquidated. Assets were sold off when the price unexpectedly increased.
