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Home BUSINESS

Radiant Capital Begins Recovery with $2.6 Million Debt Repayment

Michael Juanico by Michael Juanico
January 25, 2024
in BUSINESS, CRYPTO, FINANCE
Reading Time: 3 mins read
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  • Radiant Capital suffered a $4.5 million flash loan exploit that drained funds from the protocol due to a bug that allowed repeated deposits and withdrawals for profit
  • Radiant is repaying the debt using existing funds from the Radiant DAO Treasury and monthly protocol revenue, with 73% of users approving the plan
  • Radiant made an initial repayment of $2.6 million and plans to pay off the remaining $1.6 million debt over the next 90 days using reserves and revenue

Radiant Capital, a cross-chain lending protocol, is in the process of repaying debt after a flash loan exploit drained $4.5 million from the protocol earlier this month. The exploit took advantage of a bug in Radiant’s codebase, allowing the attacker to profit through repeated deposit and withdrawal operations. Here’s an overview of what happened and how Radiant is recovering.

JUST IN: Radiant Capital (@RDNTCapital) began repaying debts after a $4.5 million flash loan exploit

Successfully remitting 1,190 ETH ($2.6 million) pic.twitter.com/LiY5btHuSf

— BlockNews.com (@blocknewsdotcom) January 23, 2024

The Exploit

On January 2nd, Radiant’s USD Coin lending pool on the Arbitrum network was exploited for $4.5 million after the attacker discovered a rounding issue in the Radiant codebase. This led to a cumulative precision error that enabled the attacker to drain the equivalent of 13% of Radiant’s total value locked.

The Root Cause

According to blockchain analytics firm Beosin, the root cause of the exploit is not new. It basically takes advantage of a time window when a new market is activated in a lending market forked from popular protocols like Compound and Aave.

The Recovery Plan

In the aftermath, Radiant passed proposal RFP-27 to repay the bad debt using existing funds from the Radiant DAO Treasury and operating expenditures. Nearly three-quarters (73%) of users voted for this plan.

At the time, the Radiant DAO Treasury had a balance of $5.2 million while protocol revenue amounted to approximately $500,000 per month.

Initial Repayment

On January 23rd, Radiant announced an initial debt repayment of 1,190 Ether ($2.6 million) with approximately 720 ETH ($1.6 million) of bad debt remaining.

The remaining bad debt will be paid off over the next 90 days through operating expenditures, with the ability to leverage DAO reserve funds if liquidity becomes available sooner.

Conclusion

While the exploit was certainly a setback, Radiant appears to be on track to fully reimburse the lost funds within a reasonable timeframe. The protocol has reiterated its commitment to user safety and unrestricted access to deposits. It’s an encouraging sign of resilience for the young platform.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: ArbitrumBeosinBlockchaincryptoRadiant Captial
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Michael Juanico

Michael Juanico

Michael is a BSBA Management graduate from Mindanao State University and has been a professional content writer since 2019. He began exploring cryptocurrency in 2021 and has since made blockchain and digital assets his primary focus. For nearly four years, Michael has contributed research and editorial content at Aiur Labs and BlockNews, producing clear and accessible coverage of market trends, trading strategies, and project developments. He is transparent about his personal holdings in Bitcoin, TRON, and select meme tokens, combining writing expertise with hands-on market experience to deliver trustworthy insights to readers.

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