Yield Protocol declares full recovery from Euler hack, awaits user token exchange

The permissionless, collateralized fixed-rate borrowing and lending market restored operations in May and will now switch out user tokens worth $1.5 million.

Yield Protocol announced on June 27 that it had fully recovered from the Euler flash loan attack. Liquidity providers can now update their strategy tokens, the protocol said on Twitter. That was the last step to protocol restoration after “a long journey.”

Yield Protocol was one of the 11 decentralized finance protocols that suffered losses after the attack on the noncustodial lending protocol Euler Finance. It paused mainnet borrowing after the hack on March 13 and claimed losses from its liquidity pools were under $1.5 million. Euler lost over $195 million in the attack.

On May 18, Yield Protocol announced that it was “back in full swing” and users could borrow and lend for the June and September series. It said at that time that it would take “about a week” for users to be able to claim replacement tokens.

Yield Protocol worked with Euler on the return of the funds after Euler recovered most of its losses from the hackers in April, it recounted in a blog post. Then it went through the complex process of deploying 26 new contracts and executing about 300 permissioned calls to reset the fixed-yield token maturities and restore the protocol.

Protocol restoration on Mainnet is complete! We have now fully recovered the protocol from the Euler hack and the liquidity provider bug.

LPs are once again earning fees. To withdraw, LPs need to first upgrade their strategy tokens. View instructions here https://t.co/wVbPXrJKsy

— Yield Protocol (@yield) June 27, 2023

Swapping their liquidity provider tokens for new ones minted during the restoration process will make users whole. The bloggers commented:

“We are fortunate that the outcome of this hack will not result in losses to the Yield community. Nevertheless, it has been a very long journey back to full protocol restoration.”

Also in May, Yield Protocol weathered the discovery of a bug in its strategy contracts that required it to pause the protocol for two weeks.

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