Security Breach at Loopscale
In a significant setback for Solana’s decentralized finance (DeFi) landscape, Loopscale has momentarily ceased its lending operations following a severe security breach that resulted in losses of approximately $5.8 million.
According to co-founder Mary Gooneratne’s announcement on X, on April 26, an attacker exploited the protocol by executing a series of undercollateralized loans, ultimately draining approximately 5.7 million USDC and 1,200 SOL.
Impact of the Breach
The breach specifically affected Loopscale’s vaults holding USDC and SOL, leading to losses that represent about 12% of the total value locked (TVL) within the platform. Gooneratne explained that the team is currently addressing the situation and aims to restore repayment features promptly to avert additional liquidations, emphasizing their commitment to fund recovery and user protection.
Context of Cryptocurrency Security
This incident comes at a time when cryptocurrency security has been under scrutiny. A report from blockchain security firm PeckShield indicated that the first quarter of 2025 witnessed over $1.6 billion in crypto thefts from exchanges and smart contracts. Notably, more than 90% of these losses were linked to a staggering $1.5 billion hack on the centralized exchange ByBit, attributed to the Lazarus Group, a hacking faction believed to be backed by North Korea.
About Loopscale
Loopscale, which officially launched on April 10 after a six-month private beta testing phase, is touted for its innovative lending model that aims to optimize capital efficiency by facilitating direct matches between lenders and borrowers. This protocol diverges from traditional DeFi models like Aave by not pooling deposits but instead utilizing an order book mechanism.
The platform is designed to cater to specialized lending markets, including structured credit and undercollateralized lending. The main vaults offering loans in USDC and SOL provide annual percentage rates (APRs) exceeding 5% and 10%, respectively, and the platform supports various tokens including JitoSOL and BONK, along with looping strategies across more than 40 token pairs.
Currently, Loopscale has accrued around $40 million in TVL and has drawn in over 7,000 lenders, as reported by OurNetwork.
