What to know:
- Cascade lost $1.3 million in USDC after its CLS liquidity vault was hacked, forcing the platform to suspend trading.
- Security researchers had warned users for weeks, citing project inactivity and declining liquidity before the exploit.
- PeckShield tracked stolen funds moving across Arbitrum, Solana, and Ethereum before being swapped into DAI.
Cascade losses exceeding $1.3 million USDC following the hacking of one of its liquidity vaults, with user funds at risk and trade suspensions put in place. This is as a result of the recent warning issued by blockchain security experts regarding the long silence of the project.
The Polychain-supported protocol has announced on Discord that its Cascade Liquidity Strategy (CLS) vault has been hacked, resulting in losses amounting to $1.3 million.
The involved vault included funds raised through the project’s First Wave invitation program. Since the funds raised under that program had been locked until the official launch of the protocol, users could not withdraw them beforehand.
Cascade Hack Followed Weeks of Warnings
Several blockchain investigators have voiced concerns regarding Cascade within the last few weeks. According to Investigator Morsy (@morsyxbt), he continuously warned people about withdrawing their tokens due to several warning signs observed in the protocol. However, after the hack was exposed, Morsy pointed out that the team had not been active for almost two months.
Another researcher, @mztacat, warned of an issue on July 6 regarding the withdrawal of funds due to the inactivity of the project and its administrators. After the theft, he stated that his worries were proven to be justified.
In addition to X user @0xGwoni, who also claimed he had advised users to leave the protocol ten days before the attack, liquidity had dropped significantly.
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Cascade Loss Incident Traced Across Multiple Blockchains
The blockchain security company PeckShield monitored the flow of the funds following the hack. As per PeckShield, the hacker had transferred almost 1.34 million USDC on Arbitrum, moved the funds to Solana, and then moved the funds back to Ethereum using Relay Protocol and converted the funds to DAI.
Cascade Loss Extends DeFi Hack Wave
In December 2025, Cascade raised $15 million in seed investment from Polychain Capital and Variant. The platform positioned itself as a marketplace for perpetual trading that provides access to cryptos, commodities, and tokenized stocks before an IPO.
The mainnet of the platform was set to launch in Q1 2026, although, according to researchers, its communication became very slow after its last fundraising round in January.
This Cascade loss incident occurs amidst a series of DeFi attacks. In fact, just a day before Cascade lost its funds, Ostium also stopped trading after falling victim to an attack on its oracle. This resulted in a loss of $18 million. Additionally, this past month saw both Lazy Summer Protocol and Bonzo Finance suffer similar exploits.
According to Cascade, the company has hired SEAL 911 and other external security firms to look into the hack and what needs to happen going forward.
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