Coin News

$80M Rari Capital Hack 'Was The Domino' That Led to DeFi Project Babylon Finance's Demise

1 Sep, 20223 min readDeFi
$80M Rari Capital Hack 'Was The Domino' That Led to DeFi Project Babylon Finance's Demise

Babylon Finance is winding down, distributing the remaining treasury holdings, and its founder is sharing a few lessons about how the DeFi project went belly up.

The Ethereum-based project was an active asset management platform that sourced investment strategies from members of its community to earn yield. If you had an unspotted idea for making a profit in the crypto markets, Babylon had a platform that you could leverage to raise capital and execute that idea.

Though the reasons for its demise are myriad, the project’s founder Ramon Recuero was quick to point out how damaging the Rari Capital hack in April had been for Babylon, which will shutter its Discord channel and website on November 15.

“The Rari exploit was the domino that kickstarted a series of unfortunate events,” he wrote, announcing Babylon’s shuttering.

Of the $80 million stolen, Recuero’s project lost $3.4 million, which cratered the project’s total value locked (TVL) and cost the team three months of operating costs.

The hack also meant that Babylon could no longer use Rari’s Fuse pools, which let users create lending and borrowing pools for just about any type of asset. As such, BABL, Babylon’s native token, could no longer be used as collateral to borrow funds.

2/ 💣 How the Rari hack affected us- 6 gardens invested in Rari and lost 3.4M in the hack.- TVL decreased from $30 to $4M.- Fuse was abandoned. Our $10M lending market is gone.- BABL decreased from $20 to $6.- Team also lost months of runway.— Ramon Recuero | 🦇🔊 (@ramonrecuero) August 31, 2022

These events culminated in burnout, said Recuero, who wrote, “dealing with the bear market, one crisis, another, and finally, the aftermath of the Fuse hack was extremely taxing for the team. Understandably, people were really angry even if the hack wasn’t our fault.”

Babylon Finance did not immediately respond to Decrypt’s request for comment.

What can Babylon Finance users expect?

All holders of BABL and hBABL (a staked version of the native token) will be given the project’s remaining treasury holdings. The distribution is expected to begin on September 6.

None of these funds, nor any vested tokens, will go to the founding team either. “We have failed and we need to accept it,” wrote Recuero. “It goes without saying that when a project/startup fails, founders should not receive any funds.”

It remains to be seen, however, whether Babylon users will see any of the lost funds from the Rari hack. A recent governance debacle, which first agreed to provide full reimbursement, has now flipped entirely following a controversial revote.

If the reimbursement is executed, then the Babylon team will make sure its users are made whole.

Source

Subscribe to get our top stories

Coin News
App StoreApp Store