Radiant Capital Repays Debt Following $4.5M Flash Loan Exploit

Radiant Capital, a blockchain platform for cross-chain lending, has begun repaying its debt after being hit by a flash loan exploit that drained $4.5 million from the protocol. In an announcement on January 23rd, Radiant confirmed that it has successfully made an initial payment of 1,190 Ether (equivalent to $2.6 million), leaving approximately 720 Ether ($1.6 million) of bad debt remaining. The remaining debt will be paid off over the next 90 days using OpEX funds according to the RFP-27 proposal, with the option to use DAO reserve funds if they become available.

The decision to repay the debt using existing funds from the Radiant DAO Treasury and operating expenditures was voted on by users, with 73% in favor of this solution. The Radiant DAO Treasury had a balance of $5.2 million at the time of the vote and the protocol was generating approximately $500,000 per month in revenue. Developers emphasized the importance of recapitalizing the protocol and fully reimbursing the bad debt in order to ensure the safety of the platform and maintain unrestricted access to deposits for all users.

The exploit on January 2nd targeted Radiant’s USD Coin lending pool on the Arbitrum network. The attacker exploited a rounding issue in the Radiant codebase, which resulted in a cumulative precision error. This bug allowed the attacker to profit by conducting repeated deposit and withdrawal operations. Blockchain analytics firm Beosin stated that the exploit took advantage of a similar vulnerability seen in other lending markets such as Compound and Aave.

At the time of the exploit, the attacker drained approximately 1.3% of Radiant’s total value locked. The incident highlighted the need for increased security measures within the blockchain lending industry to prevent similar exploits in the future.

In order to prevent future vulnerabilities and protect users’ assets, Radiant will need to strengthen its codebase and implement stricter auditing processes. The platform will also need to educate users about potential risks and provide guidelines on secure lending practices. As the industry continues to evolve, it is critical for blockchain platforms like Radiant to prioritize the security and trustworthiness of their protocols to foster a thriving lending ecosystem.