Lending protocol Geist Finance is shutting down permanently due to losses from the Multichain exploit, according to a July 14 social media post from the app’s development team. Geist contracts were been paused on July 6, then resumed in “withdraw and repay only” mode on July 9. The latest post confirms the team does not plan to reopen lending and borrowing on Geist.
1/2 After confirmation from Multichain that the funds will not be recovered, we are announcing that Geist will not reopen. Because Chainlink oracles are tracking the value of real USDC, USDT, WBTC or ETH, they are not aware of the real value of Multichain assets.
— Geist Finance (@GeistFinance) July 14, 2023
Geist is a lending protocol running on the Fantom network. It had over $29 million worth of crypto assets locked in its contracts before the Multichain hack. Before the hack, Geist allowed users to borrow, lend, or use bridged tokens from the Multichain platform as collateral, including bridged versions of US Dollar Coin (USDC), Tether (USDT), Bitcoin (BTC), and Ether (ETH). It used Chainlink oracles to track the prices of these assets to determine their collateral and loan values.
According to the post, these oracles have stopped producing reliable information. They are now listing the values of the non-bridged or “real” versions of each coin, which are more than four times the value of their Multichain derivatives, as the team explained:
“Because Chainlink oracles are tracking the value of real USDC, USDT, WBTC or ETH, they are not aware of the real value of Multichain assets. Those assets are currently trading at around 22% of their real value.”
This makes it “impossible” to re-enable lending, as doing so would result in bad debt for holders of non-multichain coins such as Magic Internet Money (MIM) or Fantom (FTM), the team stated. As a result, Geist will not be able to reopen.
Related: Circle, Tether freezes over $65M in assets transferred from Multichain
The team clarified they are not blaming Chainlink oracles for Geist’s closure, as these oracles “worked as they should.” Instead, “Nobody is to blame except @MultichainOrg here.”
Blockchain analytics experts first reported the Multichain hack on July 7. Over $100 million had been withdrawn from the Ethereum side of Multichain bridges, including those for Dogechain, Fantom, and Moonriver. The Multichain team called the…
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