Crypto Lending Platform With $29 Million In TVL To Shut Down

Geist Finance has made the decision to permanently shut down following a hack on the Multichain platform. The lending protocol, operating on the Fantom network, suffered losses due to the exploit, leading to the suspension of Geist contracts on July 6th.

The Multichain hack, initially reported by blockchain analytics experts on July 7th, involved the withdrawal of over $100 million from the Ethereum side of Multichain bridges. This included bridges connected to Dogechain, Fantom, and Moonriver. Although the Multichain team referred to the transactions as abnormal and urged users to cease utilizing the protocol, they refrained from explicitly labeling it as a hack or exploit until July 11th.

Although they briefly resumed operations on July 9th with limited functionality, a recent social media post from the development team confirmed that Geist will not reopen its lending and borrowing services.

Before the hack, Geist allowed users to utilize tokens from the Multichain platform as collateral, including popular cryptocurrencies such as BTC, ETH, USDC, and USDT. However, the oracles used by Geist, specifically Chainlink oracles, began reporting inaccurate values for these tokens after the exploit.

Instead of reflecting the values of the Multichain derivatives, the oracles started displaying the higher values of the non-bridged real versions of each token. This discrepancy, with the non-Multichain coins being valued at over 4 times the Multichain assets, renders it impossible to resume lending without incurring significant losses for holders of non-Multichain coins.

The Geist team made it clear that they do not hold Chainlink oracles responsible for the closure of the platform, emphasizing that the oracles worked as intended. They attributed the blame solely to MultichainOrg, the organization behind the Multichain platform.