Solana’s Loopscale Pauses Lending After $5.8M Hack

The world of DeFi has hit a bump after Loopscale, a Solana-based lending platform, got hacked and lost $5.8 million. On April 26, the platform paused its lending markets and restricted some functions while it worked to fix the issue. Here’s a closer look at what happened and what it means for the future of DeFi.

What Is Loopscale and How Does It Work?

Loopscale is a DeFi lending platform that allows people to lend and borrow cryptocurrency directly without going through a traditional financial institution. It’s different from other DeFi platforms because it uses an order book model to match lenders and borrowers, instead of pooling everyone’s funds into one large pot.

The platform offers specialized lending markets, such as structured credit, receivables financing, and undercollateralized lending. These features allow users to borrow and lend in more flexible ways. But, these more complex models can also introduce more risks, especially when they aren’t properly secured.

Before the hack, Loopscale was extremely successful, with about 7,000 active users and $40 million locked in the platform. It also offered competitive interest rates, with its USDC vault offering more than 5% annual yield and its SOL vault providing over 10%.

What Happened in the Hack?

On April 26, Loopscale confirmed that a hacker had exploited a vulnerability in the platform’s system, stealing 5.7 million USD and 1,200 SOL. The hacker took advantage of a process called undercollateralized loans, where borrowers don’t need to put up as much collateral for their loans. This can make lending more accessible but also increases the risk of exploitation.

The hacker used this weakness to take out loans without providing enough collateral to back them up, eventually draining millions of dollars from the platform.

After realizing the hack, Loopscale paused most of its lending operations, limiting access to certain features like vault withdrawals, which are how users pull their money out of the platform. However, the loan repayments and top-ups were still functional while they worked on solving the issue.

How Big Was the Loss?

The stolen funds were a major hit for Loopscale, representing about 12% of the platform’s total value locked (TVL). This means that, at the time of the hack, Loopscale had around $48 million locked in its platform, and the hacker took about $5.8 million of it.

Today, an attacker took out a series of undercollateralized loans on the protocol, exploiting the Loopscale USDC and SOL Vaults for ~$5.8M

The exploit represents about 12% of funds on Loopscale.

Our team is fully mobilized to investigate, recover funds, and ensure users are… https://t.co/Up9JYZkcGn

— Mary Gooneratne (@marygooneratne) April 26, 2025

Even though the hack was significant, the platform is still working to recover from it and has pledged to protect its users. Mary Gooneratne, Loopscale’s co-founder, reassured users that the team was fully mobilized to figure out how to recover the stolen funds and secure the platform.

How Is Loopscale Handling the Aftermath?

Since the hack, Loopscale has taken steps to prevent further damage. The platform immediately paused lending functions, and vault withdrawals remain restricted for now. However, loan repayments and top-ups have been restored, which means that users who have outstanding loans can still make payments or add more funds.

The team has also been working on recovering the stolen funds and improving security to ensure something like this doesn’t happen again. The platform has said that it is investigating the incident thoroughly to understand how the hack happened and prevent similar issues in the future.

Why Does This Keep Happening in DeFi?

The DeFi space has been growing rapidly, and with that growth comes a big focus on security. As more money flows into these platforms, they become bigger targets for hackers. In fact, 2025 has already seen a string of high-profile hacks, including one where $1.6 billion was stolen from exchanges and smart contracts.

For users, this serves as a reminder of how important it is to be careful when dealing with DeFi platforms. Even though DeFi promises more freedom and opportunities, there are still risks involved. Platforms need to be vigilant and constantly improve their security, while users should understand the potential dangers of participating in these markets.

A Lesson for Users: Stay Alert

For users, the Loopscale hack is a reminder to stay vigilant when using DeFi platforms. It’s always important to do your research before lending your funds to any platform. Even the most promising projects can experience security breaches, and it’s essential to understand the risks before you dive in.

While DeFi offers amazing opportunities, it’s also important to recognize that these platforms are still relatively new and can have vulnerabilities. By staying informed and cautious, users can