Full Sail, a decentralized finance protocol built on the Sui blockchain, has announced a gradual shutdown following an oracle security incident that caused cascading losses across several applications. The decision marks a notable setback for the Sui ecosystem as it tries to position itself as a hub for innovative DeFi activity.
The incident hit protocols relying on the same oracle infrastructure. Virtue Money was among the hardest hit, reporting losses of approximately $455,000. On-chain data shows that 45 users were liquidated during the exploit, triggering forced sell-offs and further destabilizing affected pools.
Full Sail said the wind-down was not taken lightly but was necessary to protect remaining users and ensure an orderly exit. The protocol plans to distribute its remaining liquidity to users first, with any shortfall covered by the team’s own funds.
Mysten Labs, the development firm behind Sui, reportedly rejected Full Sail’s request for financial assistance. The move highlights a broader trend of infrastructure providers distancing themselves from protocol-level risks while continuing to support ecosystem growth. Mysten Labs has not issued a public statement on the rejection.
The event underscores the risks facing DeFi protocols that depend on third-party oracles, which serve as critical data bridges between blockchains and real-world information. Compromised oracle infrastructure can produce cascading failures across multiple platforms. For Sui, the loss of Full Sail may prompt other protocols to reassess their oracle dependencies and risk management strategies.
