{"investigation":{"slug":"prismalst","entity_name":"PrismaLST","trust_score":10,"severity_base":null,"score_modifier":0,"confidence":1,"status":"published","content_type":"investigation","summary":"Prisma Finance is a Liquity-forked, Ethereum-based DeFi protocol that allowed users to mint overcollateralized stablecoins (mkUSD and ULTRA) against liquid staking tokens (LSTs) such as wstETH, rETH, sfrxETH, and cbETH. On March 28, 2024, a critical vulnerability in the protocol's MigrateTroveZap helper contract was exploited for approximately $11.6 million, with a total loss across all attacker wallets of roughly $12.3 million; the primary exploiter sent the majority of stolen funds through Tornado Cash while claiming a 'whitehat rescue,' and as of 2026 the protocol's TVL has collapsed from a pre-exploit peak of approximately $220 million to under $300K.","sections":[{"content":"Prisma Finance launched on Ethereum mainnet in 2023 as a non-custodial, decentralized stablecoin protocol whose codebase was forked from Liquity, the protocol behind the LUSD stablecoin. The core mechanism allowed holders of Ethereum liquid staking tokens (LSTs) — including wstETH, rETH, sfrxETH, and cbETH — to deposit those assets as overcollateralized collateral and mint the protocol's native stablecoin, mkUSD. A second stablecoin, ULTRA, was later introduced backed by liquid restaking tokens (LRTs). The protocol was designed so that Ethereum staking rewards would gradually service the debt, theoretically enabling self-repaying loans. The native governance token, PRISMA, could be locked into vePRISMA to participate in DAO governance and boost PRISMA emissions. Prisma's smart contracts were marketed as audited by multiple security firms and immutable without proxies — a design philosophy borrowed from Liquity. Before the March 2024 exploit, the protocol reported a total value locked (TVL) of approximately $220 million.","heading":"Background","sources":[{"url":"https://prisma-finance.medium.com/prisma-finance-liquid-staking-08127169ff46","name":"","type":"other","credibility":3},{"url":"https://thedefiant.io/news/defi/prisma-introduces-ultra-stablecoin-backed-by-liquid-restaking-tokens","name":"","type":"other","credibility":3},{"url":"https://defillama.com/protocol/prisma-finance","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"On March 28, 2024, at approximately 11:25 UTC, Prisma Finance was exploited through a critical vulnerability in its MigrateTroveZap contract — a helper contract deployed to facilitate user position migrations between TroveManager contracts without requiring positions to be closed. The root cause was insufficient input validation in the contract's onFlashLoan() callback function. By directly invoking mkUSD.flashLoan() with 1,442,100 mkUSD and setting the receiver to the MigrateTroveZap contract, the primary attacker (EOA 0x7E39E3B3ff7ADef2613d5Cc49558EAB74B9a4202) was able to supply fully attacker-controlled calldata to the callback. Because onFlashLoan() performed no origin or data validation, the attacker spoofed migration logic to close a victim's Trove, withdraw wstETH collateral, and reopen the Trove with the same mkUSD debt but significantly reduced collateral — capturing the collateral difference. Two copycat attackers replicated the technique, together accounting for approximately an additional $700,000 in losses. The emergency multisig paused the protocol at 12:51 UTC, roughly 90 minutes after the initial transaction. The total loss across all three exploiters was approximately 3,479 ETH, or about $12.3 million at the time. The primary exploiter's share was approximately 3,257 ETH, or $11.6 million. Both mkUSD and ULTRA versions of the MigrateTroveZap contract were affected. The vulnerability was not present in the audited core Liquity-forked code but in a newly deployed peripheral contract, illustrating how audited base code does not guarantee safety of subsequently added components.","heading":"The Exploit","sources":[{"url":"https://hackmd.io/@PrismaRisk/PostMortem0328","name":"","type":"other","credibility":3},{"url":"https://www.certik.com/resources/blog/prisma-finance-incident-analysis","name":"","type":"other","credibility":3},{"url":"https://immunebytes.com/blog/prisma-finance-exploit-march-28-2024-detailed-analysis/","name":"","type":"other","credibility":3},{"url":"https://cointelegraph.com/news/prisma-finance-exploited-10-million","name":"","type":"other","credibility":3},{"url":"https://thedefiant.io/news/defi/prisma-finance-suffers-usd12-million-exploit","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"The primary exploiter wallet, EOA 0x7E39E3B3ff7ADef2613d5Cc49558EAB74B9a4202, was initially funded via FixedFloat, an automated exchange used to obscure fund origins. Following the exploit, the attacker dispersed approximately 3,257 ETH across three recipient wallets in transactions of 757.69 ETH, 1,500 ETH, and 1,000 ETH. One of those wallets sent an on-chain message to the Prisma Finance deployer claiming the action was a 'white hat rescue.' Despite this claim, approximately 1,850 ETH (roughly $6.5 million) was subsequently routed through Tornado Cash, the sanctioned mixing protocol, undermining the white hat narrative. Two copycat attackers also withdrew funds through Tornado Cash. Blockchain investigator ZachXBT conducted an investigation tracing the exploiter's wallet funding through FixedFloat to withdrawals on the TRON blockchain and Bybit exchange. ZachXBT alleged the attacker used timing analysis-linkable addresses and disclosed what he described as the individual's personal details — including phone numbers and email addresses — to the Prisma Finance team, who reportedly initiated legal proceedings in Vietnam and Australia. ZachXBT also alleged links between the primary attacker and prior exploits, including Arcade_xyz (March 2023) and Pine Protocol (February 2023). The attack contract address was 0xd996073019c74b2fb94ead236e32032405bc027c.","heading":"On-Chain Evidence","sources":[{"url":"https://www.coinspeaker.com/identity-prisma-finance-hacker/","name":"","type":"other","credibility":3},{"url":"https://crypto.news/blockchain-sleuth-uncovers-identity-of-prismafis-hacker-who-stole-11m/","name":"","type":"other","credibility":3},{"url":"https://www.theblock.co/post/285590/prismafi-hacker-moves-stolen-eth-tornado","name":"","type":"other","credibility":3},{"url":"https://hackmd.io/@PrismaRisk/PostMortem0328","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"The recovery process following the exploit was contentious. The primary attacker sent an on-chain message to the Prisma deployer claiming the exploit was a 'white hat rescue' and expressing intent to return the majority of funds. However, the attacker subsequently moved approximately 1,850 ETH through Tornado Cash, directly contradicting the white hat claim. The attacker's on-chain communications then demanded unusual preconditions for any fund return: a public online press conference in which Prisma Finance team members would identify themselves publicly, apologize to users and investors, and praise the attacker for exposing the vulnerability. The attacker stated that after the press conference, the specific amounts to be retained and returned would be negotiated, with the assurance that 'most of it would be returned.' Prisma Finance questioned the sincerity of these demands given the simultaneous Tornado Cash deposits. No confirmed full recovery of funds was publicly documented. On April 5, 2024, core contributor Frank Olson presented a plan to unpause the protocol following a security review. A DAO governance vote resulted in 100% approval to resume operations, and the protocol reopened on approximately April 6–7, 2024, allowing users to deposit collateral and mint mkUSD and ULTRA again. However, the PRISMA governance token had dropped approximately 30% in value immediately following the exploit and did not meaningfully recover. TVL, which stood at approximately $220 million before the exploit, fell to roughly $87 million in the immediate aftermath and continued declining; by 2026 DeFiLlama data showed TVL below $300,000, indicating near-total user exit from the protocol.","heading":"Recovery Controversy","sources":[{"url":"https://www.theblock.co/post/285776/prisma-finance-hacker-defends-exploit-demands-public-apology","name":"","type":"other","credibility":3},{"url":"https://cryptobriefing.com/prisma-finance-hacker-apology-demand/","name":"","type":"other","credibility":3},{"url":"https://cointelegraph.com/news/prisma-finance-540k-still-at-risk-hack-exploit-smart-contract","name":"","type":"other","credibility":3},{"url":"https://cointelegraph.com/news/prisma-finance-protocol-restart-dao-vote","name":"","type":"other","credibility":3},{"url":"https://cryptonews.com/news/prisma-finance-gains-strong-community-support-for-protocol-restart-with-dao-approval/","name":"","type":"other","credibility":3},{"url":"https://defillama.com/protocol/prisma-finance","name":"","type":"other","credibility":3}],"severity":"medium"},{"content":"Prisma Finance presents a critical risk profile. The protocol suffered a direct exploit resulting in a confirmed loss of approximately $11.6–$12.3 million in user funds. The vulnerability arose not in the audited core codebase (which was derived from the well-reviewed Liquity protocol) but in a newly deployed peripheral helper contract — MigrateTroveZap — that introduced an unvalidated external callback. This represents a systemic risk pattern: audits of base code do not cover subsequently added contracts unless those contracts are audited in isolation. The attacker routed the majority of stolen funds through Tornado Cash, and no confirmed full fund return has been documented. The attacker's alleged white hat framing, combined with demands for public team doxing and a press conference, is inconsistent with established responsible disclosure norms. ZachXBT's investigation allegedly connected the primary exploiter to multiple prior hacks, suggesting a pattern of malicious behavior rather than ethical security research. Post-exploit, the PRISMA token price declined approximately 30% within 24 hours and has not recovered. TVL collapsed from approximately $220 million to under $300,000 by 2026, representing a near-total loss of user confidence and capital. The protocol technically resumed operations in April 2024 following a DAO vote, but activity metrics indicate it has not regained meaningful adoption. Users should treat any remaining protocol activity with extreme caution. The anonymous or pseudonymous team structure, combined with the lack of confirmed fund recovery, significantly elevates counterparty risk.","heading":"Risk Assessment","sources":[{"url":"https://olympix.ai/blog/prismas-11-6m-exploit-was-a-trust-trap-and-olympix-would-have-triggered-it","name":"","type":"other","credibility":3},{"url":"https://quadrigainitiative.com/casestudy/prismafinancetrovemanagerexploit.php","name":"","type":"other","credibility":3},{"url":"https://cryptoslate.com/prisma-finances-11-6-million-exploit-leads-to-asset-value-plummet-mkusd-stablecoin-instability/","name":"","type":"other","credibility":3},{"url":"https://www.fxstreet.com/cryptocurrencies/news/prisma-finance-hacker-could-be-uncovered-after-investigations-by-on-chain-analyst-202404162351","name":"","type":"other","credibility":3}],"severity":"medium"}],"timeline":[{"date":"2023-09","event":"Prisma Finance launches on Ethereum mainnet, offering LST-backed stablecoin minting via mkUSD.","source":"","date_original":"2023-09-01"},{"date":"2024","event":"Prisma introduces ULTRA, a second stablecoin backed by liquid restaking tokens (LRTs).","source":"","date_original":"2024-01-01"},{"date":"2024-03-28","event":"Exploit begins at 11:25 UTC. Primary attacker (EOA 0x7E39E3B3ff7ADef2613d5Cc49558EAB74B9a4202) exploits MigrateTroveZap vulnerability, draining approximately $11.6 million. Two copycat attackers follow, bringing total losses to approximately $12.3 million.","source":""},{"date":"2024-03-28","event":"Emergency multisig pauses Prisma protocol at 12:51 UTC. Official post states mkUSD and ULTRA stablecoins remain overcollateralized and are not at immediate risk.","source":""},{"date":"2024-03-29","event":"Attacker-linked wallets begin routing stolen ETH through Tornado Cash. Approximately 1,850 ETH confirmed through the mixing protocol.","source":""},{"date":"2024-03-31","event":"Primary attacker sends on-chain messages claiming 'white hat rescue' and demanding a public press conference, team doxing, and a formal apology before discussing fund return.","source":""},{"date":"2024-04","event":"Prisma Finance confirms approximately $540,000 in user funds remain at risk. Disputes attacker's white hat framing given Tornado Cash deposits.","source":"","date_original":"2024-04-01"},{"date":"2024-04-05","event":"Core contributor Frank Olson proposes plan to safely unpause the protocol. DAO governance vote yields 100% approval to resume operations.","source":""},{"date":"2024-04-06","event":"Prisma Finance resumes operations following a post-exploit security audit. Users can again deposit LST/LRT collateral and mint stablecoins.","source":""},{"date":"2024-04-16","event":"ZachXBT publishes investigation alleging identification of primary exploiter, linking wallet funding to FixedFloat, Bybit, and TRON withdrawals, and connecting the attacker to prior exploits including Arcade_xyz and Pine Protocol.","source":""},{"date":"2026-05","event":"DeFiLlama data shows Prisma Finance TVL below $300,000, down from a pre-exploit peak of approximately $220 million, indicating near-total user exit from the protocol.","source":"","date_original":"2026-05-01"}],"sources_used":[{"url":"https://prisma-finance.medium.com/prisma-finance-liquid-staking-08127169ff46","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://thedefiant.io/news/defi/prisma-introduces-ultra-stablecoin-backed-by-liquid-restaking-tokens","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://defillama.com/protocol/prisma-finance","name":"","type":"other","archive_url":"http://web.archive.org/web/20251216085723/https://defillama.com/protocol/prisma-finance","credibility":3,"archive_timestamp":"2025-12-16T08:57:23+00:00"},{"url":"https://hackmd.io/@PrismaRisk/PostMortem0328","name":"","type":"other","archive_url":"http://web.archive.org/web/20260626190340/https://hackmd.io/@PrismaRisk/PostMortem0328","credibility":3,"archive_timestamp":"2026-06-26T19:03:40+00:00"},{"url":"https://www.certik.com/resources/blog/prisma-finance-incident-analysis","name":"","type":"other","archive_url":"http://web.archive.org/web/20251017014600/https://www.certik.com/resources/blog/prisma-finance-incident-analysis","credibility":3,"archive_timestamp":"2025-10-17T01:46:00+00:00"},{"url":"https://immunebytes.com/blog/prisma-finance-exploit-march-28-2024-detailed-analysis/","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://cointelegraph.com/news/prisma-finance-exploited-10-million","name":"","type":"other","archive_url":"https://web.archive.org/web/20260829113610/https://cointelegraph.com/news/prisma-finance-exploited-10-million","credibility":3,"archive_timestamp":"2026-08-29T11:36:10+00:00"},{"url":"https://thedefiant.io/news/defi/prisma-finance-suffers-usd12-million-exploit","name":"","type":"other","archive_url":null,"credibility":3,"archive_error":"error:no-request","archive_status":"unarchivable","archive_timestamp":null},{"url":"https://www.coinspeaker.com/identity-prisma-finance-hacker/","name":"","type":"other","archive_url":"http://web.archive.org/web/20260609032932/https://www.coinspeaker.com/identity-prisma-finance-hacker/","credibility":3,"archive_timestamp":"2026-06-09T03:29:32+00:00"},{"url":"https://crypto.news/blockchain-sleuth-uncovers-identity-of-prismafis-hacker-who-stole-11m/","name":"","type":"other","archive_url":"http://web.archive.org/web/20260521133031/https://crypto.news/blockchain-sleuth-uncovers-identity-of-prismafis-hacker-who-stole-11m/","credibility":3,"archive_timestamp":"2026-05-21T13:30:31+00:00"},{"url":"https://www.theblock.co/post/285590/prismafi-hacker-moves-stolen-eth-tornado","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://www.theblock.co/post/285776/prisma-finance-hacker-defends-exploit-demands-public-apology","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://cryptobriefing.com/prisma-finance-hacker-apology-demand/","name":"","type":"other","archive_url":"http://web.archive.org/web/20251115184955/https://cryptobriefing.com/prisma-finance-hacker-apology-demand/","credibility":3,"archive_timestamp":"2025-11-15T18:49:55+00:00"},{"url":"https://cointelegraph.com/news/prisma-finance-540k-still-at-risk-hack-exploit-smart-contract","name":"","type":"other","archive_url":"http://web.archive.org/web/20260308232340/https://cointelegraph.com/news/prisma-finance-540k-still-at-risk-hack-exploit-smart-contract","credibility":3,"archive_timestamp":"2026-03-08T23:23:40+00:00"},{"url":"https://cointelegraph.com/news/prisma-finance-protocol-restart-dao-vote","name":"","type":"other","archive_url":"http://web.archive.org/web/20260306120308/https://cointelegraph.com/news/prisma-finance-protocol-restart-dao-vote","credibility":3,"archive_timestamp":"2026-03-06T12:03:08+00:00"},{"url":"https://cryptonews.com/news/prisma-finance-gains-strong-community-support-for-protocol-restart-with-dao-approval/","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://olympix.ai/blog/prismas-11-6m-exploit-was-a-trust-trap-and-olympix-would-have-triggered-it","name":"","type":"other","archive_url":"http://web.archive.org/web/20250911172821/https://www.olympix.ai/blog/prismas-11-6m-exploit-was-a-trust-trap-and-olympix-would-have-triggered-it","credibility":3,"archive_timestamp":"2025-09-11T17:28:21+00:00"},{"url":"https://quadrigainitiative.com/casestudy/prismafinancetrovemanagerexploit.php","name":"","type":"other","archive_url":null,"credibility":3,"archive_timestamp":null},{"url":"https://cryptoslate.com/prisma-finances-11-6-million-exploit-leads-to-asset-value-plummet-mkusd-stablecoin-instability/","name":"","type":"other","archive_url":"https://web.archive.org/web/20260829132028/https://cryptoslate.com/prisma-finances-11-6-million-exploit-leads-to-asset-value-plummet-mkusd-stablecoin-instability/","cre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