Tydro Keeps Markets Paused After Chaos Labs Flags Suspected Nation-State Attack

Tydro, the largest lending protocol on Kraken's Ink Layer 2, will keep its markets paused until a migration to Chainlink price feeds is complete, the protocol said on Thursday.

The protocol was notified by Chaos Labs on May 4 of an attack on the oracle provider that displayed "patterns similar to that of a nation-state attacker," and was advised to halt all markets. According to Tydro, no bad prices were pushed to its markets before or during the pause, and no user positions were impacted.

Tydro initially suspended all lending markets on May 4 "out of an abundance of caution" while it worked with Chainlink and RedStone to onboard new push feeds on Ink as quickly as possible.

Roughly 48 hours after the initial warning, Chaos Labs confirmed that compromised keys had been rotated and an unpause was technically possible. Tydro opted to keep markets offline until a second push oracle was available.

Path Forward

Once the Chainlink migration is finalized, the feed update will trigger a 48-hour timelock before markets can resume, with an exact unpause time to be published after the transaction is executed.

Tydro will also implement a four-hour grace period during which borrowers with health factors below 1 can repay loans or top up collateral without facing liquidation. The team also said it will assess all user positions ahead of the restart and adjust market parameters if any have become unhealthy, though preliminary analysis suggests no changes will be required.

A full post-mortem covering oracle hardening and multi-oracle redundancy plans will be published once markets are back online.

The incident lands at an important moment for the protocol. Tydro, a white-label deployment of Aave v3 launched in October 2025, has driven nearly all of Ink's recent growth, with total market size recently surpassing $700 million.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.