Blast-based lender Pac Finance hits $26 million in ‘unnecessary liquidation’
Pac Finance, a lending protocol on the Blast network and an Aave fork, saw a large number of liquidations on April 11 after the platform suddenly lowered the liquidation threshold for user positions.
“Blast’s Random Aave fork reduced LT (liquidation threshold) instead of LTV (loan-to-value), resulting in $26 million worth of unnecessary liquidations,” said Stani Kulechov of Avara, founder of Aave. said On X while reposting news of liquidation.
Developer Wallet adjusted Pac Finance’s PoolConfigurator-Proxy contract function to lower the liquidation threshold for Renzo re-staked Ethereum (ezETH) loans without prior announcement or time limit, resulting in large liquidations.
Lowering liquidation thresholds on lending platforms could narrow the margin of safety offered to borrowers and lead to a surge in liquidations.
“The fundamental problem with code forks is the lack of in-depth knowledge of the software and its parameters,” Kulechov added.
Cryptocurrency Analyst 0xLoki famous 93% of the liquidations were triggered by a single address (0x..db3d), which subsequently resulted in a profit of approximately 244 ETH from the event.
Pac Finance posted to X that it was aware of the issue and was in contact with affected users. also opinion We need to “proactively develop plans to mitigate the problem.”
“In an effort to adjust LTV, we have tasked our smart contract engineers with making the necessary changes,” the platform explained. However, it has been determined that the current issue has arisen due to an unexpected change in the liquidation threshold without prior notice to our team.
“Going forward, we will be setting up governance agreements/time limits and forums for all future upgrades so discussions can be planned in advance,” he added.
Disclaimer: Larry Cermak, CEO of The Block, is an angel investor in Blast.
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