The decentralised finance sector has once again been confronted with a stark reminder of its fragility. On 8 September 2025, Nemo Protocol, a Sui-based yield-trading platform, was exploited for $2.4 million.
The attack, focused on stablecoin USDC, was swiftly reported by security firm PeckShield. Within hours, the stolen funds had been bridged from Arbitrum to Ethereum, underlining the speed and complexity of such incidents.
Nemo Protocol has responded by suspending its smart contract activity while investigations are underway. Yet the episode raises pressing questions about transparency, user trust, and the persistent vulnerabilities within DeFi infrastructure.
The Nemo Protocol Hack
Nemo Protocol was designed as a yield infrastructure on the Sui network, offering tools for tokenising yields and enabling users to trade, hedge, and leverage more efficiently.
Its focus on yield tokenisation positioned it as an innovative service within Sui’s growing ecosystem. However, on 8 September, the platform found itself at the centre of an exploit that resulted in a loss of $2.4 million, primarily in USDC.
The first public notice came not from Nemo itself but from PeckShield, a blockchain security firm that regularly monitors on-chain activity. Their alert revealed that the attacker had already transferred the stolen stablecoins from Arbitrum to Ethereum, reducing the chance of recovery.
Shortly after, Nemo confirmed the breach through its Telegram channel, stating that a security incident had impacted its Market pool. In the same announcement, Nemo informed the community that all smart contract activity would be suspended while investigations continued.
The protocol reassured users that vault assets remained secure, though it did not disclose the specific vulnerability exploited. At the time of writing, no official clarification has been given by either Nemo or the Sui development team.
Importantly, Nemo has not issued any official statement on its Twitter account, which has added to the sense of uncertainty surrounding the situation.
This silence has amplified concerns about transparency, especially given the size of the theft and the potential implications for Sui-based decentralised finance projects.
The nature of the exploit appears to align with known risks surrounding cross-chain activity. By moving stolen assets quickly across networks, attackers can exploit the gaps between chains, complicating both the investigation and any potential remediation.
This mirrors earlier incidents, such as the Cetus DEX hack, where funds were swiftly shifted and extensive recovery measures were required.
For users of Nemo, the hack has generated uncertainty over the security of their funds, even though the protocol has insisted that vaults remain untouched.
For the broader DeFi community, it has reignited debate about whether yield-focused infrastructure on newer blockchains like Sui can adequately balance innovation with robust security standards.
Rising Concerns and Warnings of Future Exploits
The Nemo incident is far from an isolated case. DeFi has repeatedly faced a cycle of innovation followed by exploitation, as attackers probe new mechanisms for vulnerabilities.
The $2.4 million theft highlights that even projects built on emerging networks such as Sui are not immune to the patterns of attack seen across Ethereum, Solana, and other ecosystems.
Stablecoins remain a key target. USDC, the asset stolen in the Nemo exploit, has long been considered one of the most reliable and liquid digital assets. Despite the theft, its market price held steady at $1.00, with a market capitalisation above $70 billion.
This stability reflects the resilience of USDC as a whole, but it also masks the underlying fragility of the protocols that integrate it. Hacks like this show that while the asset itself may remain unaffected, the platforms around it remain vulnerable.
Security observers have long cautioned that exploits targeting yield and liquidity protocols are likely to increase, particularly as DeFi platforms expand across multiple chains.
Each bridge, pool, and smart contract increases the potential attack surface. The growing complexity of these systems means that even minor oversights in code or architecture can lead to multi-million dollar losses.
The lack of immediate communication from both Nemo and Sui further illustrates another risk: the erosion of community trust. In decentralised finance, where users often have limited recourse when funds are lost, transparency is a crucial defence.
Without timely and clear updates, platforms risk losing credibility, even if the eventual investigation provides satisfactory answers. Nemo’s absence from Twitter in the aftermath of the exploit has reinforced these doubts.
For DeFi users, the lesson is twofold. First, security remains the most significant risk when interacting with decentralised protocols, regardless of network or product innovation. Second, diversification of assets and careful due diligence on platform transparency are essential.
Protocols that fail to provide clear communication during crises may not deserve long-term trust, regardless of their technical potential.
The Nemo case also underlines the importance of independent security monitoring. PeckShield’s rapid detection and reporting of the exploit ensured that information was available even before the platform’s own acknowledgement.
This independent oversight has become a necessary component of the DeFi landscape, filling gaps left by protocols that may delay or soften the disclosure of critical incidents.
Ultimately, the rising frequency of hacks shows that decentralised finance continues to operate in a high-risk environment.
Until platforms adopt consistent and rigorous security practices and until cross-chain vulnerabilities are better addressed, users should approach opportunities in DeFi with caution.
The combination of rapid innovation and incomplete defences makes future incidents likely, even on networks as technically advanced as Sui.
Conclusion
The $2.4 million exploit of Nemo Protocol has exposed weaknesses not just in one platform but across the broader DeFi ecosystem. While stablecoins such as USDC remain resilient in value, the infrastructure supporting them continues to attract and enable attacks.
The lack of transparency in the immediate aftermath, particularly the absence of an official Twitter statement, only deepens concerns over accountability.
As DeFi expands, security must be prioritised over experimentation, and users should remain vigilant when entrusting funds to emerging protocols.
The Nemo hack is not an isolated warning but part of an ongoing challenge that DeFi must address if it is to achieve both innovation and trust at scale.