Key Takeaways:
Prism, a token on Ethereum that distributes trading fees to holders, is redeploying on a new smart contract after an attacker siphoned nearly 40% of those fees throughout most of July by creating 2,500 phantom fee-earning positions.
The original PRISM token plunged about 91% to around $16 as of 14:13 UTC on Tuesday, down from a high of roughly $1,145 on June 3, according to CoinGecko data. Its market cap fell to about $82,000 on roughly $288,000 of 24-hour volume.
"The attacker created 2,500 fee-earning positions beyond the 5,000 the token's design allows, diverting just under 40% of every trading fee away from ordinary holders," the pseudonymous team behind the relaunch wrote in a post on X. The team said they did not create the project but bought the token on the open market and took over operational responsibility.
The exploit exploited a missing check in the original contract. A fee-earning position could be moved to addresses never meant to hold one, including the pool manager and the token contract itself, creating "phantom" shares that kept earning fees while counting as no one's. The new contract blocks that path: every fee position must now be backed by actual token holdings, routing to unauthorized addresses is blocked, and the hard cap of 5,000 fee positions is enforced.
Prism is built as a Uniswap v4 "hook," code that lets a token double as a liquidity pool so that simply holding it earns a cut of trading fees without manual staking. The exploit did not involve stolen principal — it corrupted the fee distribution layer that makes the token worth holding, the team said. Spectrum, a tool for launching baskets of tokens that integrates Prism for fee-earning purposes across Ethereum and other chains, is taking a more cautious approach to interacting with the mechanism, according to the team.
The team has not published an independent audit of either the exploit or the new contract. The absolute losses were limited because trading volume had been low, the team said, warning the drain would have grown alongside the token had it gained traction.
This article is for informational purposes only and does not constitute investment advice.
