Radiant Capital Repaying Customers Affected by $4.5M Flash Loan Attack
Radiant Capital has announced plans to refund the customers affected by the $4.5 million flash loan attack. At the beginning of this year, hackers launched a flash loan exploit on Radiant’s cross-chain lending platform, leading to a loss of 1900 Ether valued at around $4.5 million.
The attack created mixed feelings among the Radiant users since the incident was reported shortly after the decentralized finance (DeFi) platform activated the USD Coin (USDC) stablecoin on the Abitrum network.
Radiant Capital Flash Loan Attack
During the activation of USDC on Radiant lending protocol, the hackers attacked a vulnerable system on the time window.
A report from the probing team revealed that the hackers took advantage of a rounding issue on Radiant protocol that resulted in a “culmination of precision error.” On the X platform, the hackers created a fake Radiant Capital account to mislead the customers on the precautionary steps they should take to ensure the safety of their funds.
In the fake X post, the hackers shared phishing links to guide the affected customers on ways to block transaction approvals. The hacking incident attracted the attention of fast pace blockchain analytic firms. A statement from Peckshield argued that the attacker took the shortest time to drain multi-million dollars from the Radiant protocol.
Radiant Capital Develop Bad Debt Repayment Plan
Following the incident, the Radiant indefinitely suspended the lending and borrowing on its DeFi platform. The incident forced the Radiant DAO council to take urgent administrative actions to safeguard the protocol from further damage.
The council labeled the $4.5 million flash loan attack as a bad debt that should be repaid soon. Days after the attack, the Radiant DAO council explored different strategies to repay the flash loan victims.
Following a successful deliberation among the Radiant DAO stakeholders, the council developed a repayment plan dubbed RFP-27.
The RFP-27 proposal was later reviewed by the Radiant DAO members to examine whether the DeFi platform will meet its financial obligation and repay the customers.
Procedure for Repaying the Flash Loan Victims
After passing the review process, the RFP-27 was approved on January 8 by the Radiant DAO members. In the previous DAO voting, three-quarters of the participants supported the repayment of the flash loan attack victims with the existing funds generated from Radiant DAO Treasury and other revenue-generating streams.
The report indicates that around $5.2 million was available on the Radiant DAO Treasury during the DAO voting. Consecutively, the Radiant protocol netted $500,000 month-over-month from its daily operations.
A review of the Radiant repayment plan demonstrated that the DeFi platform will make the first payment of 1190 Ether (ETH) valued at $2.6 million The subsequent payment of 720 Ether, totaling $1.6 million, will be made in the coming days.
The Radiant plans to repay the remaining $1.6 million within 90 days. A report from the Radiant staff demonstrated that the unpaid amount will be paid through OpEX funds as outlined in the RFP-27 proposal.
The staff described the OpEX Funds as an expense the business incurred in the day-to-day running of the company. He anticipates that the liquidity generated from DAO reserves will be available in the second payment.
Elsewhere, Radiant developers underlined the need to repay the bad debt. In his statement, the developers stated that to ensure the safety of Radiant Capital and provide unrestricted access to depository and withdrawal services, it was essential to “recapitalize the protocol. The developers insisted that the Radiant team should consider full reimbursement of the bad debt.
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