Sui DeFi protocol Full Sail will cease operations due to Switchboard issues

Full Sail announced that it was suspended due to oracle problems and will give priority to compensating users.

Full Sail, a decentralized finance (DeFi) protocol based on the Sui blockchain, said that the agreement will be officially closed due to a security incident on its oracle provider Switchboard. The decision was made after confirmation of losses related to automated treasury activities, and the collection of new deposits and liquidity provider rewards has been suspended.

Full Sail outlined a phased shutdown plan in its X Platform announcement released on Tuesday: starting with the immediate implementation of restrictions and turning regular pools to cash-only status after completing additional security checks. Full Sail regards user compensation as a top priority and said it will release instructions on withdrawal and claim operations in the next few days.

Key Points

·Full Sail decided to shut down on the Sui chain due to damage to the oracle infrastructure provided by Switchboard.
·The agreement has suspended the collection of new deposits and liquidity provider (LP) rewards, and the affected pool will be converted to a cash-only mode.
·Full Sail previously disclosed an investigation into the suspected attack and later confirmed that the attacker stole approximately $91,000 from three vaults.
·Switchboard said it has suspended its network on multiple chains, including Aptos, Sui, IOTA and Movement, while investigating potential attacks.
·Full Sail stated that it will use the remaining agreement liquidity to compensate users and make up for any funding gaps to ensure that depositors receive priority payments.

Agreement starts to shut down after treasury losses

Full Sail's planned shutdown stems from a security incident last week that affected the agreement's automated vault. According to Full Sail's platform X post, the problem emerged after a suspected breach of Switchboard's oracle infrastructure-an infrastructure the agreement relies on to support its treasury and lending operations. On Tuesday, Full Sail said it had immediately suspended the collection of new deposits and liquidity provider rewards, noting that the "regular pool" would enter withdrawal-only mode after a final security check. The company views this operational adjustment as a necessary step to protect remaining funds while preparing a clear asset recovery path for users. Full Sail also said it will release instructions on the withdrawal and application process in the next few days. Timing is crucial for investors and liquidity providers: Users often need clear guidance on when the pool will reopen for withdrawals and how to submit compensation claims, especially if the agreement is about to close.

Incident timeline: Disclosure, investigation, confirmation of losses

Full Sail disclosed the incident for the first time on Saturday, saying it had suspended deposits and withdrawals, while investigating the reasons and confirming the loss of funds. The preliminary measure-suspending user actions while trying to understand the situation-is a common response in DeFi security incidents, especially when the issue may be related to price sources or other components on which the vault relies for automated execution. Switchboard, the oracle provider of Full Sail, also said in its X platform update on Saturday that it was investigating possible vulnerabilities in its Move-based implementation. In the same update, Switchboard reported that it had suspended its networks on multiple chains, including Aptos, Sui, IOTA and Movement-a move designed to limit further risks while checking whether its oracle service had been manipulated. As the investigation deepened, Full Sail later confirmed that the attackers had stolen approximately $91,000 from three of its vaults. Although this amount is smaller than the total exposure in some historical DeFi Oracle incidents, the incident highlights how losses spread rapidly through agreements that rely on external data to automate vault operations.

Broader fallout: Related stablecoin lending losses

The impact of a suspected oracle attack is not limited to Full Sail. Virtue, a stablecoin lending agreement built on IOTA (known for its VUSD stablecoin), also reported losses after the incident. According to Virtue's platform X post on Saturday, it lost approximately $455,000 and said its mortgage support for VUSD stablecoins had been damaged. This situation is significant because it suggests a broader impact: If the oracle infrastructure is compromised on multiple chains, any protocol that uses that infrastructure may be exposed to risk, even if those protocols use different architectures or business models. In other words, the event is an ecosystem-level risk factor, rather than an isolated failure within an application. Investors focusing on the DeFi infrastructure layer may view these reports as a reminder that the reliability of the oracle and discipline in incident response are equally critical to stablecoin-oriented systems and lending vaults.

Full Sail's Compensation Plan

Full Sail said it would use the remaining agreement's own liquidity to compensate affected users, adding that the team would close any funding gaps to ensure community depositors receive priority payments. This commitment is particularly important in shutdown scenarios, where the top priority is often to preserve user access to remaining funds and reduce uncertainty about repayments. Full Sail also pointed out that after completing the final security check, each pool will be switched to cash-only mode. For users, this raises practical questions-such as whether there is a separate withdrawal window for each vault or pool, or whether claims require cross-pool coordination-but the instructions Full Sail promises to release should clarify next steps. From an editorial perspective, the core theme is risk control: By immediately suspending deposits and LP reward withdrawals, and focusing on withdrawals and compensation, the agreement attempts to complete remedial measures while preventing new inflows of funds that may complicate the accounts or increase risk exposure.

Follow-up Focus

The next key update to Full Sail will be the release timing and content of its withdrawal and claim instructions. Users and liquidity providers should pay close attention to these details as they may determine how quickly funds can be withdrawn and how compensation will be calculated if the team needs to fill any funding gaps.