Loopscale (April 26 at 8:57 PM UTC): This article has been updated to include updates from Loopscale.

Solana decentralized finance (DeFi) protocol Loopscale temporarily halted its lending markets after suffering an approximately $5.8 million exploit.

Decentralized finance (DeFi) protocol Loopscale has reportedly had its lending markets temporarily halted after an exploiter siphoned an estimated $5.8 million in cryptocurrency funds.

The exploit, which occurred on Thursday, saw a hacker drain around 5.7 million USDC and 1,200 Solana (SOL) from the lending protocol after taking out “a series of undercollateralized loans,” Mary Gooneratne, co-founder of Loopscale, said in an X post.

Following the exploit, Loopscale has since “re-enabled loan repayments, top-ups, and loop closing,” but “[a]ll other app functions (including Vault withdrawals) are still temporarily restricted while we investigate and ensure mitigation of this exploit,” the protocol said in an X post on Thursday.

The exploit only impacted Loopscale’s USDC and SOL vaults and the losses represent around 12% of Loopscale’s total value locked (TVL), Gooneratne added.

“Our team is fully mobilized to investigate, recover funds, and ensure users are protected throughout this process,” Gooneratne said.

In the first quarter of 2025, hackers stole more than $1.6 billion worth of crypto from exchanges and on-chain smart contracts, blockchain security firm PeckShield said in an April report.

More than 90% of those losses are attributable to a $1.5 billion attack on ByBit, a centralized cryptocurrency exchange, by North Korean hacking outfit Lazarus Group.

Unique DeFi lending model

Launched on April 10 following a six-month closed beta, Loopscale is a DeFi lending protocol designed to enhance capital efficiency by directly matching lenders and borrowers.

It also supports specialized lending markets, such as “structured credit, receivables financing, and undercollateralized lending,” Loopscale said in an April announcement shared with Cointelegraph.

Loopscale’s order book model distinguishes it from DeFi lending peers such as Aave that aggregate cryptocurrency deposits into liquidity pools.

Loopscale’s main USDC and SOL vaults yield APRs exceeding 5% and 10%, respectively. It also supports lending markets for tokens such as JitoSOL and BONK (BONK) and looping strategies for upwards of 40 different token pairs.

The DeFi protocol has approximately $40 million in TVL and has attracted upwards of 7,000 lenders, according to researcher OurNetwork.