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.

AccessTimeIconJun 9, 2022 at 8:44 a.m. UTC
Updated May 11, 2023 at 6:46 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

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.
  • Aptos' APT Token Down 52% in April After Booming March: VanEck
    Aptos' APT Token Down 52% in April After Booming March: VanEck
  • Key Events You Shouldn't Miss at Consensus 2024
    Key Events You Shouldn't Miss at Consensus 2024
  • What to Expect From Consensus 2024
    What to Expect From Consensus 2024
  • Will Solana and Altcoins Dominate the Market Next?
    Will Solana and Altcoins Dominate the Market Next?
  • UPDATE (June 9, 11:33 UTC): Adds information on former validator FireStake's decision to return $2 million.


    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Oliver Knight

    Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.

    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.

    Read more about