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Term Finance, a decentralized lending platform, has managed to recover $1 million after suffering a $1.6 million loss triggered by a critical oracle error, according to an official announcement released today.
The incident occurred when a malfunction in the oracle service feeding asset prices into the protocol caused incorrect valuations, leading to a series of forced liquidations. These liquidations affected multiple users and caused significant financial disruption within the platform’s ecosystem.
Term Finance explained that the faulty oracle data incorrectly inflated asset prices, resulting in collateral positions being unfairly liquidated. Once the error was identified, the platform immediately halted operations to prevent further losses and launched an investigation into the source of the discrepancy.
“Our protocol relies on precise, real-time data for accurate risk management,” the Term Finance team stated. “This event underscores the critical importance of oracle reliability in decentralized finance (DeFi).”
Following swift internal efforts and negotiations with affected parties, Term Finance successfully recovered approximately $1 million worth of assets. The team credited its ability to swiftly coordinate recovery operations and collaborate with liquidity providers and third-party validators.
While the partial recovery softens the blow, Term Finance acknowledged that some users still face significant losses. The platform committed to implementing improved safeguards, including diversification of oracle sources and more aggressive circuit breakers to halt trading during abnormal market behavior.
Industry analysts point out that oracle vulnerabilities remain a persistent risk across DeFi, where smart contracts depend heavily on external data sources for accurate execution. Several notable DeFi projects have previously suffered major losses due to similar oracle-related incidents.
In response to the incident, Term Finance has outlined a multi-step plan to strengthen its infrastructure, including new partnerships with multiple oracle providers and the introduction of real-time auditing tools to monitor price feeds for anomalies.
The broader DeFi community is closely watching how Term Finance manages its recovery process, with some suggesting that the platform’s proactive communication and partial asset recovery could help maintain user trust despite the setback.
The platform stated it will release further updates regarding compensation plans for affected users and improvements to its oracle and liquidation systems in the coming weeks.
