Babylon Finance Will Fully Shatter After April's 80M Exploit

Babylon Finance will shutter in November after failing to recover from the impact of April’s $80 million exploit on Rari Capital.
Babylon is planning to extract all the liquidity from the Uniswap pool to stop people from raiding the remaining liquidity.

The crypto asset manager, Babylon Finance is shutting down after the 80 million hack in April. The company failed to recover from the hack that took place. Babylon Finance’s price today is $0.405049 with a 24-hour trading volume of $3,438.19. BABL price is down -92.2% in the last 24 hours. Babylon stored over 30 million worth of cryptocurrencies and it was among the top lending pools.

Babylon is an Ethereum (ETH)-based protocol that allows users to create investment communities called gardens and offers yield earnings. Babylon was launched in 2021 by a team with experience working at Google, Y Combinator, Telefonica, and OpenZeppelin.

Despite their efforts, they haven’t been able to revert to the negative momentum caused by the FEI hack. The company detected some loopholes in its stream that were connected to the finance protocols and hackers took its vulnerability to their advantage.

Fei protocol confirmed the attack and placed a 10miliion bounty on the hacker. Fei Protocol is an algorithmic stablecoin protocol that uses the Protocol Controlled Value (PCV) model to manage its stablecoin, which is pegged against the U.S. dollar. Rari Capital is a permissionless lending protocol, which allows users to create Fuse pools where they can supply and borrow ERC-20 tokens.

Rari allowed users to borrow assets and sell assets for them to earn yields. The yields are generated as rewards for trading activity on the liquidity pools. Babylon Finance took 0.5% management fee and 5% performance fee.

We believe the responsible and moral thing to do is to wind down the DAO and return all remaining assets to BABL and hBABL holders.

Recuero stated

1/ Babylon Finance is Shutting Down

Despite our efforts, we haven’t been able to revert the negative momentum caused by the Rari hack. 🐻 Market hasn't helped.https://t.co/Qgb5XM33ZX

🧵 TLDR below

— Ramon Recuero | 🦇🔊 (@ramonrecuero) August 31, 2022

Babylon lost 3.4 million during the Rari exploit and over 75% of the users withdrew from the company. The finance team was vouching to reach 50 million from the user-supplied assets, but their efforts ended up in futility. The Rari exploit collaborated with BABL token prices in the steep fall that led to “the point of no return” for Babylon as a sustainable protocol.

Recuero said that the team would return all the remaining assets to BABL and hBABL holders including all the tokens from founder accounts. This is to happen on September 6 and reimburse investors at the time of the hack.

The price of Tokens dropped from $20 to $5, this erased hope of any fundraising activities that might happen in the future. Only 10% of Tokens remain in the treasury.

We have failed and we need to accept it, the team has been working without salary trying to get back on track to the previous total value locked.

Recuero admitted

With this attack, the amount of money lost to crypto exploits this year continues to grow and might overtake that of 2021. Over $1 billion was stolen in Q1 of this year, including the record-breaking $600+ million from Axie Infinity. This attack comes a month after Axie Infinity announced it has been hacked, and in the same week where several DeFi protocols, including Deus DAO and Saddle Finance, have also lost millions to exploits.