Incident Overview and Immediate Action
On May 12th, Fluid was exposed to approximately $100 million in risk due to an issue with the Resolv protocol. An attacker borrowed stablecoins using discounted wstUSR as collateral and subsequently abandoned the position, creating a potential bad debt of around $21 million. Crucially, Fluid's core smart contracts were not compromised, with other markets functioning normally, and its automated risk ceiling mechanism successfully contained the fallout.
User Protection and Loss Resolution
The Fluid team acted within hours, suspending the affected lending market to guarantee the complete safety of all user funds, which faced zero risk. In collaboration with Resolv, the team facilitated an orderly wind-down of pre-incident positions and repaid roughly $70 million in debt within two days.
The final resolution involved a multi-party loss-sharing agreement. Resolv covered 50% of the losses incurred by pre-event DEX liquidity providers. The remaining bad debt of approximately $19.3 million was allocated as follows:
- Resolv covered about $9.7 million
- The Fluid governance treasury absorbed $8.2 million
- The project team itself shouldered $1.5 million
All remaining USR-related tokens were permanently burned at the contract level.
Post-Incident Measures and System Enhancements
To ensure long-term protocol health, Fluid implemented several operational adjustments, including pausing its token buyback program, significantly reducing or canceling FLUID incentive emissions, and having its foundation voluntarily defer scheduled grants for the coming months.
Fluid confirmed its smart contracts remained secure throughout. The platform has completed critical upgrades to its oracle and pricing systems. Furthermore, it will introduce legally-binding agreements with asset issuers to establish an enforceable claims framework, significantly strengthening the protocol's resilience against future anomalies.