Could the ezETH threshold cut liquidate a deposit with no borrowing debt?

Loan liquidation required an outstanding borrowing obligation to repay against collateral. A supply-only position with no borrowing debt did not have that obligation. The April 2024 event concerned ezETH-backed loans, so holding ezETH alone did not establish exposure to the same liquidation. A remaining supplied position could still face separate withdrawal constraints, including limited underlying liquidity.

Did changing the liquidation threshold also change the borrowing interest rate?

A liquidation-threshold update did not, by itself, set a loan’s borrowing interest rate. The threshold changed how collateral supported outstanding debt. Interest and its accrual concerned the borrowing obligation, while the threshold concerned liquidation eligibility.

Can one liquidation clear debt in every Pacfinance reserve?

A liquidation targeted the debt asset specified in its call. An account with several borrowing obligations could therefore retain debt after a successful liquidation. The completed transaction’s debt-covered amount described the selected repayment, while account-level debt described the broader outstanding position.

Could restoring the old threshold automatically return seized collateral?

A later threshold update would not itself reverse an earlier completed liquidation. Updating reserve configuration changed the rules the Pool applied; the earlier liquidation had already repaid debt and transferred collateral. Restoring a parameter could affect subsequent eligibility calculations, but returning previously transferred assets would require a separate corrective action.

Was the 10% legacy exit fee a Pacfinance liquidation penalty?

The 10% charge belonged to DeFiReclaim’s documented legacy exit service for selected Pacfinance positions on Blast. Its Router split the withdrawn underlying into 90% for the user and 10% for the service treasury. It did not establish the liquidation terms or collateral loss for an April 2024 borrower.

Pacfinance liquidations followed a cut to the ezETH collateral threshold on Blast

Last updated - Friday, October 16, 2026

Pacfinance liquidations on April 11, 2024 followed an unexpected reduction in the ezETH liquidation threshold on Blast. The change reduced the collateral buffer supporting existing loans and exposed affected accounts to forced repayment. Liquidators repaid debt and took corresponding collateral under the lending Pool’s rules.

A lower ezETH threshold reduced the support for existing debt

Reducing ezETH’s liquidation threshold lowered the collateral value the Pool counted toward keeping an existing loan outside liquidation. The published Pool code required the account’s health factor to be below 1 for liquidation. A borrower could therefore lose headroom without choosing a larger loan.

The threshold represented a proportion of eligible collateral value. It did not measure the number of ezETH tokens an account held. A smaller proportion meant the same eligible holding contributed less toward the account’s liquidation buffer.

Account composition also mattered. The Pool’s account-data calculation took the borrower’s collateral configuration and selected efficiency-mode (eMode) category as inputs. It returned total collateral, total debt and an account-level liquidation threshold alongside the health factor. A reserve setting alone did not describe every account’s complete position.

Borrowers close to the applicable liquidation boundary had less room to absorb the change. An earlier decision to borrow within the previous limits did not fix those parameters for the loan’s lifetime.

The Pool linked liquidation to repayment and collateral removal

A completed liquidation repaid debt for an eligible borrower and removed collateral supporting the obligation. The Pool exposed a dedicated liquidation call for this purpose, separately from ordinary repayment and withdrawal methods.

The call identified the account and assets

The liquidation call specified the borrower, collateral asset, debt asset and debt amount to cover. The collateral involved in the event therefore did not, by itself, identify the asset the liquidator supplied for repayment.

The Pool passed these inputs to its liquidation logic together with the price oracle and the borrower’s eMode category. Execution depended on the applicable account and market state.

The event recorded debt repaid and collateral received by the liquidator

The LiquidationCall event included the debt covered, collateral received by the liquidator and the liquidator’s address, along with the chosen collateral receipt option. The collateral amount excluded any liquidation protocol fee transferred to the treasury. A requested amount or submitted transaction alone did not establish how much debt repayment and collateral removal actually occurred.

LTV and liquidation thresholds governed different limits

Loan-to-value limits governed borrowing capacity, while liquidation thresholds governed the collateral test for maintaining outstanding debt. Changing one parameter could therefore produce a different consequence from changing the other.

The limit on additional borrowing

The loan-to-value ratio, or LTV, determined how much borrowing eligible collateral could support. A lower LTV could restrict additional borrowing capacity. That capacity reading answered a question about access to debt, alongside the reserve’s other restrictions. It did not replace the separate liquidation test.

The boundary for an existing obligation

The liquidation threshold affected the collateral backing debt already outstanding. Cutting it could move an existing account across the liquidation boundary. This distinction explained why an intended LTV adjustment could become much more disruptive when the actual change reached the liquidation threshold.

What caused the April 11, 2024 ezETH liquidation event?

The April 11, 2024 ezETH liquidation-threshold cut on Blast triggered liquidations of existing Pacfinance loans. The developer wallet changed parameters through the PoolConfigurator-Proxy contract. The change reached borrowers whose existing debt no longer satisfied the revised collateral requirement.

Pacfinance’s statement dated April 11, 2024 described an intended LTV adjustment and an unexpected liquidation-threshold change. The team said it had tasked a smart contract engineer with the adjustment. It said the threshold change occurred without prior notification to its team. The team also said it was in contact with affected users and developing a mitigation plan.

What caused the April 11, 2024 ezETH liquidation event? (Pacfinance liquidations) - diagram

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A falling token price was not necessary for a lower threshold to reduce collateral headroom. Prices and debt balances remained relevant to each account’s calculation, so the event did not imply identical outcomes for every ezETH holder.

Collateral surrendered and debt repaid described different amounts

A liquidation reduced a borrowing obligation while taking collateral from the borrower. Debt repayment had economic value because it extinguished the corresponding obligation.

The two sides also used their respective asset units. A collateral token amount and a debt token amount did not represent equivalent quantities. Interpreting the effect on an account required their values and the actual repayment, alongside the collateral removed. A headline liquidation total did not supply that individual account calculation.

Administrative controls determined how changes reached borrowers

Pacfinance’s April 2024 response proposed a governance contract, timelock and discussion forum for future upgrades. The announcement proposed safeguards; it did not confirm their implementation for later transactions.

The Pool accepted reserve configuration updates only from its designated PoolConfigurator. A timelock could delay changes only when its permissions and rules actually covered them. A promised discussion process did not itself add a delay to an already executed configuration change.

The April 1 audit preceded the threshold incident

Salus’s April 1, 2024 v3 audit reviewed a defined code scope before the ezETH event. Its centralization finding concerned the owner of NativeYieldDistribute, which could distribute and withdraw yield funds. The report marked that finding mitigated. Yield custody and reserve configuration involved different controls, so that status did not establish protection against the later threshold change. An audit of specified code also did not certify every subsequent administrative parameter choice.

Interpreting an ezETH-backed account after the cut

An affected account’s history needed to connect the changed collateral requirement with any liquidation it actually underwent. The threshold update explained the altered test; execution records established whether repayment and collateral removal followed.

Identify the ezETH balance the account used as eligible collateral. A separate wallet balance did not establish collateral inside the loan position.
Match the applicable threshold to the account state around the change. A value from before the update described the earlier requirement.
Establish the outstanding debt at the relevant block. The original borrowing amount could differ from the obligation during liquidation.
Look for successful execution and the actual liquidation amounts. Crossing a risk boundary alone did not record a completed collateral seizure.
Keep each asset’s units separate when reading debt covered and collateral removed. Token counts alone did not establish their relative values.

Where the records showed repayment and collateral removal, the original deposit amount no longer described the borrower’s remaining position. The post-liquidation balances determined what the account still held and owed.

Deprecation changed access to remaining positions

Pacfinance later became deprecated and its original application became unavailable. Those developments changed access to legacy positions without reversing earlier liquidations. A remaining supplied balance represented what the account still owned after any completed collateral removal.

DeFiReclaim’s Pacfinance support page, last reviewed August 30, 2026, covered selected legacy lending positions on Blast. Its exit route required a matching wallet and market, available underlying liquidity and a successful fresh simulation of the complete Router transaction. That route concerned redeeming remaining aTokens, the receipt tokens for supplied assets. Collateral already transferred through liquidation fell outside that remaining receipt-token claim.

Pacfinance liquidations: frequently asked questions

Could the ezETH threshold cut liquidate a deposit with no borrowing debt?: Loan liquidation required an outstanding borrowing obligation to repay against collateral. A supply-only position with no borrowing debt did not have that obligation. The April 2024 event concerned ezETH-backed loans, so holding ezETH alone did not establish exposure to the same liquidation. A remaining supplied position could still face separate withdrawal constraints, including limited underlying liquidity.
Did changing the liquidation threshold also change the borrowing interest rate?: A liquidation-threshold update did not, by itself, set a loan’s borrowing interest rate. The threshold changed how collateral supported outstanding debt. Interest and its accrual concerned the borrowing obligation, while the threshold concerned liquidation eligibility.
Can one liquidation clear debt in every Pacfinance reserve?: A liquidation targeted the debt asset specified in its call. An account with several borrowing obligations could therefore retain debt after a successful liquidation. The completed transaction’s debt-covered amount described the selected repayment, while account-level debt described the broader outstanding position.
Could restoring the old threshold automatically return seized collateral?: A later threshold update would not itself reverse an earlier completed liquidation. Updating reserve configuration changed the rules the Pool applied; the earlier liquidation had already repaid debt and transferred collateral. Restoring a parameter could affect subsequent eligibility calculations, but returning previously transferred assets would require a separate corrective action.
Was the 10% legacy exit fee a Pacfinance liquidation penalty?: The 10% charge belonged to DeFiReclaim’s documented legacy exit service for selected Pacfinance positions on Blast. Its Router split the withdrawn underlying into 90% for the user and 10% for the service treasury. It did not establish the liquidation terms or collateral loss for an April 2024 borrower.