Term Finance, an Ethereum fixed-rate lending protocol, was drained of about $8.5M after an attacker cornered a majority of its thinly-held DAO token and voted through malicious proposals to seize the protocol's strategy vaults.

The attack cost almost nothing to set up: the attacker's funding traced to just 2 ETH routed through Tornado Cash. Because the governance token had a low float and thin voter turnout, that small stake was enough to clear the proposal and quorum thresholds and self-approve transactions that redirected vault assets.

Roughly 2,843 ETH (about $6.87M) and 1.68M USDC were pulled out, with the USDC swapped into DAI. Decurity's Defimon bot flagged it first, and PeckShield and CertiK confirmed it. Term Labs irreversibly shut down all Term Meta Vaults and revoked their DAO roles, blocking new deposits while keeping withdrawals open.

It is a textbook governance takeover: when a token is cheap and sparsely held, control of the treasury can cost far less than the treasury itself, a risk any low-float DAO with money in its vaults should treat as live.

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