Some borrowers defaulted without a chance to repay, highlighting second-order risks from blockchain halts.
The fallout from the Dec. 27 exploit on the Flow blockchain continues to weigh on the ecosystem, with the most acute disruption hitting NFT-backed loans that matured while the network was frozen.
The Flow Foundation has said no user balances were impacted by the incident, but its decision to pause the network’s Cadence execution environment until the morning of December 29 prevented users from repaying loans as they came due.
Flow-based NFT lending platform Flowty said 11 loans matured during the pause, a period when borrowers were unable to transact or move tokens. One loan was repaid via autopay, eight defaulted, and two failed to settle due to account restrictions tied to the exploit.
Although the blockchain is technically back online, much of the Flow ecosystem remains partially impaired. Token swapping is still largely unavailable, leaving many borrowers unable to acquire the assets needed to repay loans even after the pause was lifted.
In response, Flowty said it paused settlement on all loans as of 2:15 p.m. ET on December 30. Loans that mature during this period will not settle or default and will instead remain outstanding in what the platform has described as “in limbo.” Flowty said it plans to open a defined repayment window once broader ecosystem functionality stabilizes, though no timeline has been set.
The move effectively freezes both sides of the market: lenders will not accrue additional interest on paused loans, while borrowers who may already have sufficient funds remain unable to repay and reclaim their NFTs. Flowty said it opted for the approach to avoid forced defaults driven by network-wide limitations and the potential loss of irreplaceable NFTs.
Flowty has also disabled new loan listings and removed existing listings from its marketplace to limit further exposure.
The network’s native FLOW token dropped roughly 40% in price immediately following the initial incident and has shed a further 17% to $0.086 as of press time, according to The Block price data.
