Community-led asset management protocol Babylon Finance has announced plans to shut down its operations. The closure set for November 15, follows its failure to recover from the impact of the Rari attack despite its several efforts.
Ramon Recuero, the protocol’s founder, shared this development via a Twitter thread, detailing the firm’s journey so far and lessons learned.
Babylon Finance’s journey to ground zero
Before the Rari hack that resulted in its fall from grace, Babylon Finance was financially healthy and operated perfectly well. It reached a top 10 lending pool on Rari, holding $30 million worth of different cryptocurrencies. About $10 million of these assets were contributions from its users.
Babylon Finance reportedly lost $3.4 million to the attack. After the hack, users withdrew about 75% of the total value locked on the platform.
Afterward, its $10 million loan on Rari was suspended as it became impossible to use its native token BABL as collateral to borrow funds on Rari. To become self-sustainable, the protocol needed to attain $50 million in total value locked. Ramon said the team worked without pay for months but couldn’t attain the target.
The hack on Rari, coupled with the recent market downturn complicated issues for the Decentralized Finance (DeFi) protocol.
In April, hackers exploited a reentrancy vulnerability in Rari’s Fuse lending protocol. The lender lost $80 million to this attack. It immediately paused borrowing on the platform and offered a $10 million bounty to the hackers to return the stolen funds.
Beginning on September 6, Babylon Finance will consolidate its remaining treasury and distribute the same amongst BABL and hBABL holders. Users have up until November 15- when the site will be shut down to withdraw their funds.
In addition to shutting down its services, Babylon Finance will also shut down its website and Discord channel on November 15. Ramon said the community is welcome to build on the Babylon project as all of its codes are open-sourced.
In reaction to the announcement, BABL slumped over 90% in the past 24 hours and now trades at $0.48 according to CoinMarketCap.