Term Finance Permanently Closes Meta Vaults After Governance Attack; Estimated Losses Reach $8.5M

Term Labs, the team behind fixed-rate lending protocol Term Finance, said it has permanently shut down all Term Meta Vaults following a governance attack. The company added that DAO governance permissions have been revoked, while withdrawal channels remain available. In an Aug. 23 update, Term said the shutdown is irreversible and will permanently block any new deposits. The project did not disclose how much remains in the vaults, saying only that it will "explore pathways" to address any shortfall, leaving depositors' recovery amounts unclear. Blockchain security firm PeckShield estimated the attacker took about 2,843 ETH (worth roughly $6.87 million at the time) and 1.68 million USDC, which was later swapped into about 1.68 million DAI, for total losses of around $8.5 million. On-chain records show two key transfers: 2,841.74 WETH sent to an address labeled on Etherscan as "Term Finance Exploiter 1," and 1.68 million USDC sent to an address labeled "Term Finance Exploiter 2." Yearn said Term's vault contracts used Yearn's V3 architecture, but the exploit occurred through Term's custom governance wrapper, a pathway Yearn said does not apply to standard Yearn vaults. Term said its current investigation indicates the underlying protocol and direct lending markets were not affected. The team said it is working with external security firms on remediation and recovery, but has not provided a compensation commitment or timeline.