In a recent incident impacting the web3 and decentralized finance (DeFi) space, Term Finance, an Ethereum-based platform offering fixed-rate lending, reportedly recovered $1 million of the $1.6 million lost due to a misconfigured oracle in its Treehouse (tETH) market.
The error is said to have caused improper liquidations, raising concerns among security experts and highlighting vulnerabilities in DeFi systems.
According to a statement shared by the Term team on X, the recovery efforts yielded significant results.
Of the initial loss, approximately 223.197 ETH (valued at around $400,000) was retrieved internally, while an additional 333 ETH (worth about $600,000) was secured through negotiations.
As a result, the outstanding loss has been reduced to 362.03 ETH, or roughly $650,000, a substantial improvement from the original 918 ETH impact.
While the specifics of the negotiation process remain undisclosed, the recovery marks a step forward for the platform.
Term Finance clarified that the incident was not a malicious attack or a smart contract exploit.
An update on our ongoing recovery efforts after yesterday’s oracle issue:
The total outstanding loss is now 362.03 ETH (~$650K) — significantly reduced from the original 918 ETH impact.
Of the original loss:
223.197 ETH was captured internally,
333 ETH was successfully…— Term Labs (@term_labs) April 27, 2025
Instead, the root cause was a bug in an updated ETH oracle, which disrupted the platform’s operations and led to the erroneous liquidations.
The team emphasized (seeking to reassure users and the broader DeFi community):
“This was not a hack. No smart contracts were exploited, and user funds were not directly targeted.”
The oracle mishap adds to a string of recent challenges in the DeFi sector, which has seen a surge in exploits, bugs, and hacks.
For instance, Solana-based DeFi platform Loopscale suffered a $5.8 million exploit, while crypto exchange Bitget reported a $20 million loss after an organized group manipulated a market for an obscure token.
Bitget has since identified eight accounts believed to be responsible and announced plans to pursue legal action.
The past weekend also saw another DeFi protocol, Impermax Finance, fall victim to an attack, with losses exceeding $150,000, as reported by security firm TenArmor.
These incidents underscore the growing risks in the rapidly evolving DeFi landscape, where technical errors and malicious actors continue to test the resilience of platforms.
For Term Finance, the partial recovery of funds is a somewhat positive development, but the remaining $650,000 loss highlights the challenges of managing complex systems like oracles, which serve as critical price feeds for DeFi protocols.
Oracles are essential for ensuring accurate market data, but misconfigurations can lead to cascading errors, as seen in this case.
The broader DeFi community is likely to scrutinize this incident as a reminder of the importance of robust oracle design and rigorous testing.
As platforms like Term Finance work to restore trust and recover losses, the blockchain and crypto industry faces ongoing pressure to enhance security measures and mitigate risks.
While Term’s response demonstrates a commitment to addressing the issue, the incident serves as a cautionary example for DeFi projects that are navigating the balance between innovation and stability in the fast-evolving web3 environment.