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Radiant Capital begins debt repayment after $4.5M flash loan exploit

Cross-chain lending blockchain Radiant Capital has commenced debt repayments after a flash loan exploit drained the protocol of $4.5 million earlier this month.

According to the Jan. 23 announcement, Radiant has made a successful initial payment amounting to 1,190 Ether (ETH) ($2.6 million), with approximately 720 ETH ($1.6 million) of bad debt remaining.

“The remaining bad debt will be paid off over the next ~90 days through the use of the OpEX funds per RFP-27, with the ability to leverage DAO reserve funds if liquidity becomes available sooner,” Radiant staff wrote.

The repayment was conducted in accordance with the RFP-27 proposal, which passed on Jan. 8. Nearly three-quarters (73%) of users voted to repay the bad debt using existing funds from the Radiant DAO Treasury and operating expenditures. At the time of passing, the Radiant DAO Treasury had a balance of $5.2 million, while protocol revenue amounted to approximately $500,000 per month.

“To ensure the protocol’s safety and guarantee unrestricted access to deposits for all users, it is imperative to recapitalize the protocol and fully reimburse the bad debt,” developers commented.

On Jan. 2, Radiant’s USD Coin (USDC) lending pool on the Arbitrum network was exploited for $4.5 million after the attacker discovered a rounding issue in the Radiant codebase, which led to a cumulative precision error. The bug enabled the Radiant attacker to profit through repeated deposit and withdrawal operations.

“The root cause is not new: It basically exploits a time window when a new market is activated in a lending market (forked from the popular Compound/Aave),” said blockchain analytics firm Beosin. At the time of the incident, the exploit drained Radiant the equivalent of 1.3% of its total value locked.

Related: Wise Lending drained of $440K worth of crypto in apparent flash loan exploit