In a recent turn of events, Blast lending project Pac Finance has found itself embroiled in controversy following a sudden change in the loan-to-value ratio (LTV) of its ezETH pool.
This unexpected alteration led to the liquidation of approximately $24 million, sparking outrage among affected users and the broader crypto community.
Pac Finance, known for enabling borrowers to secure loans based on the value of their collateral, implemented the LTV change without prior notice or official announcement.
The move, which saw the LTV of the ezETH pool adjusted to 60%, was initiated by a developer wallet associated with Pac Finance’s PoolConfigurator-Proxy contract on April 11 at 9:06 AM.
The unforeseen parameter shift caught many ezETH leveraging farmers off guard, resulting in a breach of the protocol’s collateral rules.
Smart contract developer Roffet[dot]eth was among those who highlighted the ramifications of the sudden change, emphasizing the detrimental impact on users who had leveraged their assets within the Pac Finance ecosystem.
PAC Finance Responds And Addresses The Situation
In response to the outcry, Pac Finance acknowledged the issue and stated that they are actively working to address the concerns and mitigate the damage caused to affected users.
The platform attributed the incident to a lack of communication and oversight, indicating that the liquidation threshold adjustment was made without proper notification to the team.
The situation has underscored the importance of transparent communication and protocol governance within the decentralized finance (DeFi) space.
As users increasingly rely on DeFi platforms for financial services, trust and accountability become paramount.
The Pac Finance incident serves as a reminder of the risks associated with rapid protocol changes and the need for robust mechanisms to safeguard user interests and maintain platform integrity.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.