Full Sail, a decentralized finance (DeFi) protocol operating on the Sui blockchain, has announced plans to wind down following a major security breach linked to oracle provider Switchboard. The incident led to significant user losses and immediately triggered emergency measures by the Full Sail team.
Security incident and protocol response
The exploit reportedly stemmed from a compromise in Switchboard’s oracle infrastructure. Oracles like Switchboard deliver critical price and data feeds to DeFi protocols, enabling their automated functions. Last week, Full Sail’s automated vaults were targeted after Switchboard’s oracle suffered a suspected breach.
Full Sail disclosed the incident on Saturday, stating it had verified a loss of user funds. The protocol quickly paused all deposits and withdrawals as it began a thorough investigation to assess the scale and cause of the damage.
Switchboard also confirmed it was investigating a potential compromise of its Move-based oracle implementations, suspending its networks on Aptos, Sui, IOTA, and Movement as a precaution.
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AAPLMini dictionary: Oracle provider, such as Switchboard, supplies DeFi protocols with up-to-date external data—like asset prices—so smart contracts can execute appropriately and securely manage user assets.
User compensation plan
According to a statement from Full Sail, the attack resulted in a removal of approximately $91,000 from three of its vaults. The protocol announced on X that it would immediately disable new deposits and prohibit liquidity provider (LP) reward claims. Regular pools are being put into withdrawal-only mode, pending final security reviews.
Full Sail said it will prioritize compensating affected users. The team intends to use the protocol’s remaining liquidity to cover losses and has committed to repaying community depositors first. Any remaining shortfall will be covered by the Full Sail team itself.
Full Sail affirmed its commitment to user protection, declaring, “Repayment to community depositors remains our highest priority, with instructions on claims and withdrawals to follow in the coming days.”
Withdrawal and claim guidelines are expected to be published soon, once security checks are completed.
Broader impact across DeFi
The repercussions extended beyond Full Sail. Virtue, a stablecoin lending protocol built atop IOTA, reported separate losses amounting to about $455,000 as a result of the Switchboard compromise. Virtue also disclosed that this incident impaired the collateral that backs its VUSD stablecoin.
Switchboard’s swift move to halt its network on multiple blockchains, including Sui and IOTA, reflects growing concerns over security vulnerabilities in emerging DeFi infrastructures.
| Protocol | Blockchain | Reported Losses |
|---|---|---|
| Full Sail | Sui | $91,000 |
| Virtue | IOTA | $455,000 |
The recent incident highlights ongoing challenges faced by DeFi protocols in managing third-party risks and maintaining secure operations for end users.
