Term Finance closes Meta Vaults after $8.5M governance drain

Term Finance permanently closed its Meta Vaults after a governance exploit on Aug. 23 routed vault funds to an attacker-controlled address. The company disabled new deposits, left withdrawals available and revoked the vaults’ DAO governance roles. Term has not confirmed the total loss or committed to reimburse depositors.

Blockchain security firm PeckShield estimated the attacker removed about 2,841.7435 WETH, roughly $6.87 million, and 1,679,639.29 USDC, which was reportedly swapped for around 1.68 million DAI, for a combined figure near $8.5 million. Term has not published a vault-by-vault accounting to confirm those amounts.

Term’s governance model uses an opt-out system in which liquidity-provider token holders can veto queued parameter changes during a seven-day delay. An on-chain reconstruction found a proposal affecting an ETH Meta Vault remained open for six days without a veto. When that proposal executed at 06:25 UTC on Aug. 23, its first actions set the governance delay cooldown to zero and a transaction routed 2,841.7435 WETH through a newly added strategy to an attacker address. About 22 minutes later, five proposals across USDC vaults executed and removed 1,679,639.29 USDC.

Term has not explained how the proposer obtained authority to queue those actions or why veto and delay controls failed to stop the executions. The company said it is working with outside security teams on remediation and recovery, but it did not provide a timetable or specific restitution plans.

Yearn Technologies, whose V3 architecture underlies Term’s vault contracts, said the exploit occurred through Term’s custom governance wrapper and does not apply to standard Yearn vault setups. Term indicated that, based on its investigation so far, the underlying protocol and direct lending and borrowing markets were not affected, limiting the confirmed impact to the Meta Vault product.

With withdrawals still open, the amount individual users can recover remains unclear. Keeping withdrawals available does not by itself confirm sufficient liquidity for every withdrawal because Term has not released detailed accounting for each affected vault. The company stated it will explore options to address any shortfall but has not committed to reimbursements or provided a recovery schedule.