Pac Finance Users Lose Over $20 Million Due to Developer Action

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  • Pac Finance users have lost over $20 million through liquidations
  • They were liquidated after a platform developer abruptly changed critical parameters
  • The protocol’s founder acknowledged the situation with the platform saying it’s working to mitigate the issue

DeFi platform Pac Finance users are lamenting losing over $20 million after a platform developer unexpectedly changed operating parameters causing mass liquidations. An analysis of the situation unearthed that the developer increased the loan-to-value (LTV) ratio for Renzo Restaked Ether (ezETH) to 60% forcing the platform to automatically close existing trades that didn’t meet the new LTV standard. The protocol’s founder acknowledged the problem and the platform disclosed it’s in contact with affected users, raising hopes that affected users will be refunded.

A Strategy to Mitigate the Issue

In an X (formerly Twitter) post, Pac Finance said that the change in LTV ratio was made by a “smart contract engineer” whom it had entrusted to “make the necessary changes.” The platform added that they’re in contact with affected users and are working out a strategy “to mitigate the issue.”

The DeFi platform also admitted that its current model of changing critical parameters needs to be revamped. According to the protocol, it’ll use a “governance contract./timelock and a forum” to ensure key network changes are communicated to the community ahead of time.

The incident has caused an uproar within the DeFi circles with some describing the parameter change as arbitrary and criminal while others advised the platform’s users to withdraw their funds.

Undoxxed with Zero Knowledge

Others noted that such scenarios are bound to happen since most developers, especially on new chains, “are undoxxed with zero experience.” Pac Finance is powered by the recently launched Ethereum scaling layer Blast.

Although liquidations are a common phenomenon in the crypto world, it’s usually due to fluctuating market conditions and rarely due to smart contract engineers tampering with LTV ratios without notice.