What happened
On April 26, 2025, a faulty update to Term Finance's tETH oracle caused the Ethereum fixed-rate lending protocol to undervalue Treehouse tETH collateral, and healthy loans were liquidated. The loss was about 918 ETH, roughly $1.6 to $1.65 million. Term Labs said it was not a hack: no smart contract was exploited, and the cause was human error during a sensitive system update.
One oracle component returned prices with 18 decimals where the protocol expected 8, so tETH positions looked under-collateralized. Liquidators seized the collateral in two transactions 12 seconds apart. Term captured about 223.2 ETH (about $400,000) internally and negotiated the return of another 333 ETH (about $600,000), leaving about 362 ETH (about $650,000) unrecovered. Term said affected users would be fully reimbursed.
How it happened
- Term Labs pushed an update to the oracle that priced tETH collateral.
- One oracle component output its value with 18 decimals while the rest of the pricing path assumed 8, an internal inconsistency that made tETH look drastically cheaper than it was.
- Against that price, tETH-backed loans appeared under-collateralized, so they became eligible for liquidation.
- Liquidators seized the collateral in transactions
0x8da015d7c362a082fd23736b08dc17d3a9794086b713590273c9535a4c47a7e2(block 22353826) and0xaa10cc076f27fcf7fc0b0a83ad170983e6791f5349d097ef4db0592a55d64048(block 22353827), about 918 ETH in total. - Term recovered about 556 ETH through internal capture and negotiation; about 362 ETH was not recovered.
Protocol details
Evidence
- report Term Finance Reportedly Recovers $1M After Oracle Error Triggers $1.6M Loss in DeFi Market crowdfundinsider.com
- report Term Labs on X: Postmortem: Term tETH Oracle Decimal Inconsistency x.com
- analysis DeFiLlama defillama.com
- analysis The Term Finance $1.5M Exploit and the Case for Real-Time Defense getfailsafe.com
- analysis Term Finance loses $1.65 million due to misconfiguration, recovers some web3isgoinggreat.com
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