Tokenized equities platform Edel Finance halted its lending protocol after a targeted exploit manipulated the wrapping mechanism of a tokenized Alphabet stock. The attack inflated collateral values by roughly 7,700%, resulting in approximately $403,000 in bad debt.
The exploit centered on wGOOGLx, a wrapped tokenized Google share. An attacker interfered with the conversion rate between GOOGLx and its wrapped form, causing the collateral to be valued at 78 times its true market price. The attacker then borrowed real assets against this phantom value.
Critically, the protocol’s price oracles were not the weak point. Edel confirmed that Chainlink feeds accurately reported the correct Google share price. The flaw existed solely within the internal wrapping and conversion mechanisms.
The team quickly detected and contained the breach, freezing all version-one contracts. Edel stated it will absorb all losses to ensure depositors are made whole and restore balances one-to-one. A white-hat settlement has been offered to the attacker, with coordination underway with exchanges.
A redesigned version-two system with updated pricing logic is being deployed to prevent similar price-manipulation attacks. This incident highlights the persistent vulnerability of wrapping mechanisms as tokenized equities extend the attack surface of decentralized finance.