Babylon Finance Announces Termination Of Services Following A Ruinous Hack

According to a statement made on August 31 by Babylon Finance company’s founder Ramon Recuero, the company will stop offering its services for the DeFi asset management protocol on November 15.

Babylon Finance Shuts Down Services

Ramon Recuero, founder of Babylon Finance, disclosed the decision on Twitter in the late hours of Wednesday. The software engineer revealed that the asset management protocol would finally be shutting down in November of this year.

1/ Babylon Finance is Shutting Down

Despite our efforts, we haven’t been able to revert the negative momentum caused by the Rari hack. Market hasn’t helped.https://t.co/Qgb5XM33ZX

TLDR below

— Ramon Recuero | (@ramonrecuero) August 31, 2022

He added that the platform’s problems have also been exacerbated by the ongoing bear market. Recuero continued by highlighting the harm the hack had caused on Babylon Finance.

One result is the protocol’s total value locked (TVL) dropping from $30M to $4M. Damage from the hack also includes the termination of Babylon Finance’s lending platform Fuse and the collapse of its native cryptocurrency BABL. Recuero thinks that they greatly exacerbated bearish attitudes already present in the environment.

BABL/WETH Falls. Source: TradingView

The Ethereum-based project was an active asset management platform that drew on the expertise of its community for investment ideas in order to generate yield. Babylon offered a platform you could use to raise money and carry out your plan if you had an undiscovered way to benefit from the cryptocurrency markets.

The Hack

“The Rari exploit was the domino that kickstarted a series of unfortunate events,” Recuero wrote.

The protocol was in a rather good position prior to the Rari/FEI hack because it had established a top 10 lending pool on Rari and attained a total value locked of $30 million.

However, the Rari/FEI exploit caused its investment gardens to lose $3.4 million, and within two days, its customers withdrew 75%, or around $14 million, of its TVL.

Another casualty of the FEI fiasco (remember that they had the power to return these funds and make victims whole. They simply chose not to ). https://t.co/ypeI6A17hR

— Sam Kazemian (¤, ¤) (@samkazemian) August 31, 2022

Rari/FEI was compelled to reprice the Rari assets to zero after deciding to discontinue its reimbursement arrangements.

The $10 million loan market on Rari, Fuse, was discontinued because its native token, BABL, could no longer be used as security to borrow money, according to the statement.

2/ How the Rari hack affected us

– 6 gardens invested in Rari and lost 3.4M in the hack. – TVL decreased from $30 to $4M. – Fuse was abandoned. Our $10M lending market is gone. – BABL decreased from $20 to $6. – Team also lost months of runway.https://t.co/6yHTPzCFck

— Ramon Recuero | (@ramonrecuero) August 31, 2022

What Next?

Recuero listed some of the steps the Babylon team will be doing before the eventual closure in a Medium post. All remaining treasury holdings would be distributed to BABL and hBABL holders by the team. On September 6, the distribution procedure will start. Additionally, investors will receive their tokens back. Additionally, the group will withdraw all of the liquid assets from Uniswap.

The group has also given each strategist till November 15 to complete their plans. The article claims that day will see the closure of both the Babylon Finance website and Discord server.

The BABL token likewise had a 90% value loss at this time, falling from $20 to $5. The token was trading at US$0.4031 at press time, after free falling from US$5.13 less than 24 hours ago. The release states that since “the token supply is limited, non-inflationary, and only 10% remains in the treasury,” the fall has eliminated any chance of further fundraising initiatives.

BABL/USD Tanks 92% since demise announcement. Source: CoinGecko

Additionally, it was disclosed that since the Rari/FEI hack, the team has not received salary for their work.

Featured image from UnSplash and chart from TradingView.com and CoinGecko

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