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Prisma Finance is currently addressing a recent security incident that resulted in a loss of $11.6 million, concentrating on a recovery plan.
As per a forum update from core contributor “Frank,” the decentralized finance (DeFi) protocol Prisma Finance has detailed its immediate actions and upcoming measures following the breach. Frank mentioned that $540,000 of the compromised funds remains at risk.
“Among the affected Troves, several have revoked the contract that contained the vulnerability, with approximately $540k of collateral still exposed at the time of this writing,” Frank stated.
A path forward after the security incident: https://t.co/JLVHfXvNn4
— Prisma Finance (@PrismaFi) March 31, 2024
Prisma Finance’s Proposal
In light of the exploit, a crucial element of the strategy involves a substantial decrease in protocol owned liquidity (POL), reducing the weekly POL allocation from $40k to $0.
Another action focuses on the distribution to stakeholders. Frank clarified the choice to cut the weekly distribution to vePRISMA holders by half. “We will reduce the weekly amount allocated to vePRISMA holders from $160k to $80k,” he explained.
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These suggested modifications, according to Frank, are not intended to be permanent but are essential for the current situation. “As new information emerges regarding this matter, we will also commit to reassessing these parameter adjustments one week after implementation,” he stated.
$11.6 Million Hack Involving FixedFloat Exchange
The breach at Prisma Finance was carried out through a vulnerability in the migration zap contract, resulting in an approximate loss of $11.6 million.
This contract was designed for managing transitions between trove managers but was exploited to withdraw assets, including wrapped staked Ethereum (wstETH). The misappropriated assets were quickly converted to Ethereum (ETH), making tracking and recovering the funds more challenging.
The update asserted that the core functionality of Prisma Finance remains intact. The problem was limited to a specific component, the migration zap contract, thus not jeopardizing the entire protocol.
In reaction to the breach, Prisma Finance implemented an emergency pause on all trove managers. This measure has suspended all borrowing activities and has blocked any new liquidity from entering the protocol, aiming to stabilize the situation.
The post Prisma Finance Works Toward Exploit Recovery, $540K Vulnerable appeared first on Cryptonews.
