Babylon Finance Closes on Nov. 15 Following the Rari/FEI Hack

From the reports, Babylon Finance (a DeFi asset management protocol) will cease operations on Nov. 15. On Aug. 31, Ramon Recuero made the official proclamation known to the public (the founder). 

As a result of the assault on the Rari/FEI, estimates showed that the Babylon Finance investment gardens had sustained a loss of $3.4 million. Because of this, its customers and users have lost faith in the company’s ability to achieve its goals. As a result, they have withdrawn 75% of their TVL.

After the statement’s release, it became evident that the Protocol encountered significant obstacles in its attempt to recoup the $80 million scam perpetrated on them. It became apparent after they issued the statement. As a result, things became even more difficult for the Protocol since the present market scenario has suddenly made it much more difficult for them to bounce back from where they were.

Breaking Into the Rari/FEI System

Before the breach, they believed that the Protocol was in a favorable position. According to the records, Rari/FEI had a value of about $30 million. In addition to that, the Protocol has established itself as one of the top 10 lending pools on Rari. 

The disastrous attack meant that there should be a scraping of the Protocol’s main accomplishment. Because of the effects of this assault, they estimated that a total loss of $3.4 million occurred. This loss has further had unfavorable repercussions for the company’s investment portfolio. 

In only two days, its customers and users instantly removed 75% of its TVL. Estimates revealed that a total of $14 million would be the maximum amount they withdrew. Due to these unfortunate events, Rari/FEI has concluded that it will no longer be offering its reimbursement schemes. 

Because of this rash choice, the company needed to reassess the worth of its assets and put the whole amount at zero. The $10 million Fuse lending market on Rari was closed when the platform’s native token, BABL, was no longer recognized as valid collateral to obtain a cash loan.

Additionally, BABL reduced the value by more than 90 percent (from $20 to $5) during this time. There was credible evidence to suggest that the staff has been functioning since the Rari/FEI hack without compensation for the effort they have put in.

According to Babylon, the company’s current financial state, its access to financial resources, and most importantly, its users’ confidence was all negatively impacted as a direct consequence of the security incident.

What Should Users of Babylon Finance Do Next?

The members of the Babylon Finance team have made it quite apparent that effective on Sept. 6; they would consolidate all of their treasury assets into a single portfolio. The team has also clarified that it will split the portfolio between holders of BABL and hBABL shares. 

Babylon Finance users should liquidate any monetary investment they may have in their accounts. It is essential to have everything done before Nov. 15, the day they will delete the account history.

A countermeasure, as well as a preventative one, is to stop the pool from emptying while the liquidation process is in progress. The Protocol has used up all liquid assets inside its Uniswap v3 pool collection.