Full Sail, a decentralized finance protocol operating on the Sui blockchain, is winding down operations after a security incident involving Switchboard’s oracle infrastructure led to approximately $91,000 being withdrawn from three automated vaults. The team says protecting depositors and returning their funds will be its primary objective.
- Full Sail has stopped new deposits and liquidity-provider reward claims.
- About $91,000 was reportedly drained from three vaults.
- The incident was linked to a suspected compromise involving Switchboard’s Move-based oracle implementations.
- Full Sail plans to transition its remaining pools into withdrawal-only mode.
- The protocol says its remaining liquidity will be used to compensate affected users, with the team covering any additional shortfall.
Full Sail Begins an Orderly Shutdown
Full Sail announced Tuesday that it would begin winding down the protocol following last week’s security incident.
As part of the shutdown process, the platform immediately disabled new deposits and stopped claims for liquidity-provider rewards.
The team said its regular pools will eventually switch to withdrawal-only functionality once final security checks have been completed. This approach is intended to prevent additional funds from entering the affected system while giving existing depositors a path to recover their assets.
Full Sail said compensating users is its highest priority and that further instructions covering withdrawals and claims are expected to be released in the coming days.
Switchboard Incident Triggered the Losses
The shutdown follows an incident involving Switchboard, an oracle infrastructure provider used by Full Sail’s automated vaults.
Full Sail initially reported the security problem on Saturday, confirming that funds had been lost and temporarily halting deposits and withdrawals while its investigation continued.
Switchboard separately reported that it was investigating a potential compromise involving its Move-based implementations. The provider subsequently halted its network deployments across several blockchains, including Sui, Aptos, IOTA and Movement.
Oracles play an important role in DeFi protocols because they provide external information—such as asset prices—that smart contracts use to determine collateral values, borrowing limits and other financial conditions.
A compromise of this infrastructure can therefore create risks beyond the oracle itself, potentially affecting applications that rely on its data.
About $91,000 Removed From Three Vaults
Full Sail later determined that an attacker had taken approximately $91,000 from three of its vaults.
The affected products were automated vaults, making the integrity of external pricing and other infrastructure particularly important to their operation.
The incident demonstrates how DeFi protocols can remain exposed to vulnerabilities in third-party infrastructure even when the underlying blockchain continues operating normally.
For users, this creates an additional layer of risk: funds can potentially be affected not only by weaknesses in a protocol’s own smart contracts but also by dependencies such as oracle networks and other external services.
Another Protocol Reported Larger Losses
Full Sail was not the only project to report losses following the Switchboard-related incident.
Virtue, a stablecoin lending protocol operating on IOTA, reported approximately $455,000 in losses and said the backing of its VUSD stablecoin had been affected.
The separate incident underscores the potential consequences when multiple DeFi applications depend on shared infrastructure.
Because decentralized applications often rely on common third-party components, a single infrastructure-level security problem can potentially spread its impact across multiple protocols and blockchain ecosystems.
Full Sail Promises to Prioritize Depositors
Full Sail says it intends to use its remaining protocol-owned liquidity to help reimburse affected users.
If those resources are insufficient to cover the losses, the team has committed to covering the remaining shortfall so that community depositors receive priority.
The protocol has not indicated that it plans to restart operations after the shutdown.
Instead, its immediate focus is completing security checks, transitioning pools into withdrawal-only mode and publishing detailed instructions for users seeking to recover their funds.
The Full Sail shutdown highlights a persistent challenge for DeFi: security depends not only on individual smart contracts but also on the wider network of infrastructure those applications rely upon. As Full Sail moves toward closure, the effectiveness of its compensation plan and the findings from the broader Switchboard investigation will determine how affected users ultimately recover their funds.
