DeFi Protocol Term Finance Suffers Governance Attack, Loses $8.5M

KuCoinFlash

Release Time: 08/23/2026 22:02:43

Summary

On August 24, 2026, the DeFi protocol Term Finance reported a governance attack, resulting in an estimated loss of $8.5 million. Attackers drained 2,843 ETH and $1.68 million in USDC, later exchanging the stablecoin for DAI. PeckShield and CertiK confirmed the DeFi exploit. The breach impacted Term Strategy Vaults on Yearn V3, though Yearn stated the vulnerability originated from Term’s custom governance, not its standard vaults. Despite the presence of a 7-day timelock and LP voting mechanisms, the attack succeeded. The loss amounted to 68% of Term’s total value locked (TVL), which stood at $12.45 million prior to the incident. A protocol update is anticipated as Term Labs investigates the attack vector.

BlockBeats report: On August 24, the treasury of Term Finance, a DeFi fixed-rate lending protocol, suffered a governance attack. Blockchain security firms PeckShield and CertiK estimated losses of approximately $8.5 million. The attacker allegedly transferred around 2,843 ETH and $1.68 million in USDC, then exchanged the USDC for DAI.

The attack targeted Term Strategy Vaults built on the Yearn V3 architecture, but Yearn stated that the vulnerability stemmed from a custom governance mechanism deployed outside the vaults by Term, and standard Yearn vaults were unaffected. Notably, Term vault governance transactions were originally subject to a seven-day timelock and allowed LPs to vote to veto, but these protective measures failed to prevent the attack.

Prior to the attack, the Term Vault TVL was approximately $12.45 million, with this loss accounting for about 68% of the vault's total TVL. Term Labs is currently investigating the specific attack vector.

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