Silo Labs has confirmed a security breach resulting in a loss of approximately $545,000. The exploit targeted a smart contract tied to an unreleased leverage feature, which was deployed for testing purposes. According to the team, the affected contract was separate from the core protocol infrastructure, and no user funds were impacted.
The issue was first flagged by Silo’s real-time risk monitoring partner, Hypernative Labs. Blockchain security firm PeckShield identified the vulnerability as a user-controlled input flaw.
Response and Containment
In response, Silo temporarily paused the affected UI router and later confirmed that the core protocol remained secure. All isolated markets and vaults continued to function normally, and the affected leverage contract was paused to prevent further interaction. The protocol’s operations were restored shortly after internal reviews.
Silo Labs emphasized that the breach did not affect any user-held assets. The funds lost in the exploit were limited to SiloDAO’s internal wallet, which was being used to test the new leverage feature. The team has stated that all core contracts, including vaults and markets, remain safe and unchanged.
Market Reaction and Future Actions
Following the incident, SILO’s token price fell by over 11%. Some of the decline was recovered after the team issued clarifying statements and resumed full operations. The protocol has committed to releasing a detailed post-mortem and conducting further reviews of peripheral contracts.
Co-founder Ayham Jaabari confirmed on social media that the affected contract had been audited prior to deployment and reiterated that it was never intended for public use. He stated that no user funds were compromised and that the team was actively investigating the issue.
Silo Labs has not yet disclosed whether the attacker has been identified or if any recovery efforts are underway. As of now, all system functions have resumed and the team continues to monitor protocol security.
