DeFi Exchange Osmosis Got Hit By $5 Million Exploit: Report

The DEFI exchange Osmosis got hit with a $5 million exploit in a recent hack which forced developers to halt the network as we can see more today in our latest cryptocurrency news.

The DEFI Exchange Osmosis is built using CosmosSDK and was exploited today, draining up to $5 million from the liquidity pools. The decentralized exchange was stopped at 10:49 PM ESt at the block height of 4,713,064 as per the announcement from Mintscan which is an Osmosis block explorer. The exploit happened two blocks before the halt and the developers working on fixing the bug reproted:

“Liquidity pools were NOT completely drained. Devs are fixing the bug, scoping the size of losses (likely in the range of ~$5M), and working on recovery.”

Liquidity pools were NOT "completely drained".

Devs are fixing the bug, scoping the size of losses (likely in the range of ~$5M), and working on recovery.

More info to come. https://t.co/WOu7MMgSUM

— Osmosis 🧪 (@osmosiszone) June 8, 2022

The users on Reddit warned the Osmosis developers about the critical bug in the decentralized exchange and the thread was later removed by the moderator. According to the user, if you provide liquditiy to the pools, you will be able to withdraw 50% more than the deposit without the bonding period. The on-chain transactions show how one user exploited this bug and they started the exploit with 26 OSMO tokens and made 13 more OSMO tokens in the first transaction.

 

One instance shows how they were able to provide liquidity of 101,230 OSMO in a transaction that was made six hours ago. About 30 seconds later, the exploiter exited the position with 151,084 OSMO tokens and made up to 50% profits. They then repeated the process about 30 times and each time they increased the holding by 50%. The wallet raked in 70,000 of the Cosmos native ATOM Tokens out of the process which is valued at $600,000 and they transferred some of the profits to another address and repeated the same process. The user repeated the process and the attacker made $5 million from the bug.

As recently reported, the Cross-chain Osmosis crypto exchange is expanding its horizons with the launch of the new bridge that will enable trading for ETH-based assets. OSmosis announced the launch of Gravity Bridge which is an inter-blockchain protocol for Ethereum translator that is built by Althea, an internet service provider. To this date, the decentralized exchanges expanded immensely by deploying the implementations of their contracts on alternative chains with projects like Ren and Torchain trying to enable cross-chain asset swaps and unified liquidity pools.