Osmosis DEX Hacked for USD 5M, Team Denies Liquidity Pools Being 'Completely Drained'

Source: AdobeStock / Pavel Ignatov

 

Osmosis, a proof-of-stake (PoS) blockchain with a decentralized exchange (DEX) application within the Cosmos (ATOM) ecosystem, has been exploited to the tune of some USD 5m.

The project's official Twitter account confirmed the hack but denied allegations that liquidity pools were completely drained. "Devs are fixing the bug, scoping the size of losses (likely in the range of ~[USD]5M), and working on recovery."

To prevent users from exploiting the vulnerability, the network validators halted the chain.

"As of block #4713064 the Osmosis chain has been halted for emergency maintenance," said network validator 'EmperorOsmo(Hathor Nodes)'. "At this time the Osmosis DEX and Wallet are inoperable, until repairs are completed."

The exploit was reportedly possible due to a "critical bug" in the protocol's liquidity pools that allowed everyone to increase their position by 50% simply after adding and removing liquidity to any pool. The bug could have potentially drained all liquidity pools.

On-chain transactions show that users had already started exploiting the vulnerability before the network was stopped. For instance, one address that "repeatedly executed the bug for more than 30 minutes" managed to make off with around USD 75,000 worth of ATOM, per user 'Junønaut'.

According to DeFi Llama, Osmosis currently has a total value locked (TVL) of more than USD 212.77m.

The project's native token OSMO has also been adversely affected by the recent exploit. The token is currently trading at USD 1.08, down by 4.1% over the past 24 hours. In the past 7 days, it's down 22%, as well as 68% in a month. 

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