Pac Finance, a lending protocol based on Blast, acknowledged a sudden change in its liquidation threshold, leading to substantial losses for its users, with $26 million being liquidated within seconds. This incident underscores the ongoing challenges faced by DeFi protocols on the Ethereum layer-2 network, Blast. Previously, Munchables, a web3 game on this network, experienced a $62 million loss due to an attack, although the funds were later returned by the hacker voluntarily.

The liquidation event on Pac Finance was reported by Will Sheehan, founder of Parsec Finance, who observed a significant number of liquidations. This observation was supported by Kydo, a developer at EigenLabs, who noted that the liquidation threshold was altered without notice, resulting in the rapid liquidation of funds.

Pac Finance allows users to earn interest by depositing their crypto assets and sets a loan-to-value ratio (LTV) to limit borrowers' loans based on their collateral. Changes to the LTV are typically communicated beforehand. However, in this case, a developer wallet adjusted the LTV for Renzo and restaked ETH to 60%, causing borrowers to fall short of collateral requirements and triggering liquidations, notably one user losing $23.9 million.

Pac Finance responded by engaging with affected users to devise a mitigation plan and implementing measures to prevent future incidents, such as establishing a notification framework for decisions. The platform attributed the issue to an unexpected alteration of the liquidation threshold, emphasizing the need for better communication within the team.

Stani Kulechov, founder of Aave, commented on the situation, highlighting the risks associated with forking code, as Pac Finance is based on Aave's code. He noted the importance of understanding the software thoroughly to avoid such incidents in the future.