Loopscale, a decentralized finance (DeFi) protocol built on the Solana blockchain, recently faced a security breach that resulted in a loss of approximately $5.8 million. The exploit occurred on April 26 when a hacker managed to withdraw around 5.7 million USDC and 1200 Solana from Loopscale's lending protocol by exploiting undercollateralized loans, as explained by Loopscale's co-founder, Mary Gooneratne.

Following the breach, Loopscale temporarily halted its lending markets to assess the situation and prevent further losses. While the protocol has re-enabled loan repayments, top-ups, and loop closing functions, other activities, including Vault withdrawals, remain restricted as the team investigates the exploit and implements safeguards to mitigate risks.

Gooneratne stated that the breach only affected Loopscale's USDC and SOL vaults, accounting for approximately 12% of the protocol's total value locked (TVL). She reassured users that the team is actively working to recover the funds and ensure the security of the platform.

The incident at Loopscale adds to the growing list of crypto-related hacks and exploits in the industry. In the first quarter of 2025, hackers reportedly stole over $1.6 billion worth of cryptocurrencies from exchanges and smart contracts, with a significant portion attributed to a $1.5 billion attack on the centralized cryptocurrency exchange ByBit by the North Korean hacking group Lazarus Group.

Despite the security breach, Loopscale offers a unique DeFi lending model that aims to enhance capital efficiency by directly connecting lenders and borrowers. Launched on April 10 after a six-month closed beta, the protocol supports specialized lending markets like structured credit, receivables financing, and undercollateralized lending.

Unlike traditional DeFi lending platforms that pool cryptocurrency deposits, Loopscale operates on an order book model, setting it apart in the DeFi ecosystem. The protocol offers attractive annual percentage rates (APRs) for assets like USDC and SOL, with rates exceeding 5% and 10%, respectively. Additionally, it provides lending markets for tokens such as JitoSOL and BONK, along with looping strategies for over 40 different token pairs.

With approximately $40 million in TVL and over 7,000 lenders, Loopscale has garnered attention within the DeFi space. While the recent exploit has raised concerns about the platform's security, the team's swift response and commitment to safeguard

Source: https://cointelegraph.com/news/solana-s-loop-scale-halts-lending-after-5-8-m-hack?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound