PAC Finance, a lending protocol on Blast Network and an Aave fork, experienced $26 million in 'unnecessary liquidations' on April 11 due to a sudden decrease in the liquidation threshold for user positions. The change was made without prior announcement or a timelock, leading to large liquidations. AAVE's creator, Stani Kulechov, highlighted the issue, noting the fundamental problem with forking code is the lack of in-depth knowledge of the software and parameters. A single address profited about 244 ETH from the event, which accounted for 93% of the liquidations. PAC Finance acknowledged the issue and is developing a plan to mitigate it, including setting up a governance contract/timelock and forum for future upgrades.

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Pac Finance — a lending protocol and an Aave fork on Blast network — saw a large amount of liquidations on April 11 after the platform suddenly decreased the liquidation threshold for user positions."Random Aave fork on Blast decreased liquidation threshold (LT) instead of loan to value (LTV) causing $26M worth of unnecessary liquidations," Avara's Stani Kulechov, the creator of Aave, said on X while reposting news of the liquidations.The developer wallet adjusted a function on Pac Finance’s PoolConfigurator-Proxy contract, which brought down the liquidation threshold of Renzo restaked ether (ezETH) loans without prior announcement or a timelock, resulting in large liquidations.Reducing the liquidation threshold in a lending platform can cause a surge in liquidations due to the narrower margin of safety it provides for borrowers."Fundamental problem with forking code is the lack of in-depth knowledge of the software and the parameters," Kulechov further commented.Crypto analyst 0xLoki noted that 93% of the liquidations was executed by a single address (0x..db3d), which subsequently profited about 244 ETH from the event.Pac Finance posted on X that it is aware of the issue and is in contact with impacted users. It also claims to be "actively developing a plan with them to mitigate the issue.""In our effort to adjust the LTV, we tasked a smart contract engineer to make the necessary changes," the platform explained. "However, it was discovered that the liquidation threshold was altered unexpectedly without prior notification to our team, leading to the current issue.""Going forward, we will set up a governance contract/timelock and forum for all future upgrades to ensure that discussions are planned ahead of time," it added.Disclaimer: Larry Cermak, CEO of The Block, is an angel investor in Blast.

$26 Million in Unnecessary Liquidations at PAC Finance Due to Sudden Policy Change