Cross-chain lending platform Radiant Capital has begun debt repayment of debt following the depletion of the protocol’s funds by $4.5 million earlier this month due to a flash loan exploit.
As of the announcement on January 23, Radiant has effectively completed an initial payment totaling 1,190 Ether ($2.6 million), leaving behind an estimated 720 ETH ($1.6 million) in bad debt.
“In accordance with RFP-27, the remaining bad debt will be repaid within the next 90 days using OpEX funds; if liquidity becomes available earlier, DAO reserve funds may be leveraged,” Radiant staff wrote.
The repayment was carried out per the RFP-27 proposal, which was approved on January 8. In a vote, 73% of users supported the repayment of the bad debt with funds already circulated from the Radiant DAO Treasury and operating expenses.
As of its demise, the Radiant DAO Treasury maintained a balance of $5.2 million, with an estimated monthly revenue of $500,000.
Developers commented, “To guarantee unrestricted access to deposits for all users and ensure the protocol’s security, it is critical to recapitalize the protocol and reimburse the bad debt in its entirety.”
On January 2, an attacker gained access to $4.5 million from Radiant’s USD Coin lending pool on the Arbitrum network by discovering a rounding error in the Radiant codebase that resulted in a cumulative precision error. The vulnerability facilitated the Radiant assailant in generating revenue via recurrent deposits and withdrawals.
“The underlying cause is not novel: It exploits a time window upon activating a new lending market (a fork from the popular Compound/Aave),” according to Beosin, a blockchain analytics firm. The vulnerability deprived Radiant of 1.3% of its total locked value at the time of the incident.
