Hack Hit Babylon Finance To Shut Down

Babylon Finance is the latest in line to discontinue its services, but the reason behind the asset manager’s demise is different from most. The asset management platform recently announced its planned shut down, citing a previous ruinous event. The Crypto Winter also played a part.

Effects of the Rari Hack precipitated bearish sentiments into the ecosystem

Ramon Recuero, founder of Babylon Finance, disclosed the decision on Twitter in the late hours of Wednesday. The software engineer revealed that the asset management protocol would finally be shutting down in November of this year.

Despite our efforts, we haven’t been able to revert the negative momentum caused by the Rari hack,

Recuero said.

He further noted that the persistent bear market has also contributed to the platform’s woes. Recuero then went on to highlight the damaging effects of the hack on Babylon Finance.

One of the effects is the reduction in the protocol’s total value locked (TVL) from $30M to $4M. The abandonment of Babylon Finance’s lending solution Fuse and the crash of its native token BABL following the hack are also part of the damage. According to Recuero, these precipitated massive bearish sentiments into the ecosystem.

In a Medium article, Recuero noted some actions the Babylon team will be taking before the eventual closure. The team would be distributing all the leftover treasury holdings to BABL and hBABL holders. The distribution process will begin on September 6. Furthermore, investors will have their tokens returned to them. The team will also be pulling out all the remaining liquidity from Uniswap.

Additionally, the team has given all strategists until November 15 to close their strategies. According to the article, the Babylon Finance website and Discord channel will shut down on that day.

Babylon Finance lost over $3M in the Rari Hack

The Rari Capital hack occured on April 20, with over $80M stolen. Rari Capital is a DeFi lending and borrowing platform. Through its Fuse pool, clients have the opportunity to lend and borrow assets, with attractive yield generating terms. Unfortunately, Babylon Finance had several assets worth up to $30M on Rari Capital.

The hack cost Babylon Finance over $3M, with Rari cancelling its planned compensation to affected users. This was the start of Babylon Finance’s woes. Following the hack, Babylon Finance clients made a mass withdrawal of their assets from the protocol. This was due to the panic brewing. The native token of the platform also crashed by over 70%.

Efforts at containing the situation have remained futile. The difficult decision to shut the platform down was the team’s last resort.

Abigal .V. is a cryptocurrency writer with over 4-years of writing experience. She focuses on news writing, and is skilled in sourcing hot topics. She’s a fan of cryptocurrencies and NFTs.

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