Osmosis to Cover Possible $5M Exploit Loss, Chain to Remain Halted for 2 Days
The cause of the liquidity pool exploit has been identified, and a new blockchain update will be pushed in at least 48 hours.
The Osmosis Chain will remain halted for at least 48 hours following a liquidity pool exploit that resulted in an estimated loss of $5 million.
- In a series of updates on Twitter and a Discord post at 17:32 UTC Wednesday, the Osmosis team said it would cover all losses using its strategic reserves.
- The bug was an issue with the JoinPoolNoSwap function, in which liquidity providers received 50% more than they should have when they withdrew from liquidity pools.
- A "small number of individuals exploited the bug," Osmosis said. Four individuals have been identified as being responsible for 95% of the amount that was exploited.
- "Funds have been linked to [centralized exchange] accounts," Osmosis community analyst RoboMcGobo wrote on Discord, referring to centralized crypto exchanges. "Law enforcement has been notified. We're hopeful that the exploiters will do the right thing here so that aggressive action will not be necessary."
- FireStake, a validator for the network at the time, said it had benefited from the exploit, converting $226 to $2 million in a "temporary lapse of good judgment," according to a tweet.
- FireStake said that it is working with Osmosis to return the stolen funds and that it will no longer be a validator on the network.
- Osmosis is a blockchain built on top of Cosmos, another blockchain. It is known for its decentralized exchange (DEX), which also stopped executing trades when the chain freeze took effect.
- The osmosis token (OSMO), which is thinly traded on MEXC, has gained 1.2% over the past 24 hours, recently trading at $1.07.
UPDATE (June 9, 11:33 UTC): Adds information on former validator FireStake's decision to return $2 million.
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