Exploit confirmed for Osmosis.
A short time ago, the Osmosis chain was halted via co-ordination of the validator set. It seems that the team and validators became aware of an exploit underway, that was draining liquidity from the protocol. What is known so far is that some funds have been taken from the liquidity pools. It seems at this stage that it is a portion of funds, however the size is not clear yet.
The most recent announcement in the Osmosis Discord server clarifies what is going on, after rumor and speculation have been swirling around:
There is a lot of misinformation swirling around right now on twitter and other platforms, so I wanted to set the record straight on a few things.
Yes, there was an exploit of a bug that resulted in a loss of funds in some of the Osmosis liquidity pools. At this time, we don't know the exact scale of the funds that were removed from the protocol, but all of the protocol's liquidity has NOT been drained as some are claiming. After we discovered the issue, the validators were able to respond and coordinate a an emergency halt within 12 minutes.
The focus now is to squash the bug, test a new patch extensively, and coordinate a restart of the chain. I know this is stressful for a lot of you, but please bear with us while we fix this issue and get more information on the extent of this event.
I cannot speculate on the cause of the bug, an ETA on the chain restart, or the pools that were impacted because we simply don't know yet. When I get more information I will be sure to update you. Thank you again for your patience on this.
Quote from "RoboMcGobo" in the announcement channel of Osmosis discord.
So what happened?
It seems that someone discovered an error which allowed them to exploit over time and remove funds from the pool. It seems that they discovered that if you added liquidity, and then removed it out again almost immediately, they received back more than they started with. Repeat this process over and over, and profit significantly.
From my understanding, a user discovered that this was going on, and first posted it on Reddit in this post. Initially, the comment was met with disbelief, until other users attempted to do the same and found it worked. The thread and comments in it around the process where deleted, to prevent further funds loss.
It seems that once the team and validators became aware of the issue, with a matter of 12 minutes the chain was halted. The fast response likely saved significant funds.
While it is too early to speculate how much has been lost, it appears to be in the millions. With a TVL around $200 million, it is likely to hurt, but not be a fatal blow. What impact it will have on confidence in an already wounded AMM thanks to the impacts of the LUNA collapse
This Twitter thread by Junonaut gives probably the clearest summary of the situation I have seen so far.
What have you heard? Do you have any more info?
I'll update the post once more details are available.
For know, we know the chain is halted, some funds are lost, and the Dev's are working on it.
Stay safe everyone.
JK.
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Oh man, another bug just when everyone is feeling jumpy.
Looks like it's still new enough, not a lot of crashing price yet.
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Most OSMO is traded on its own dex, which is halted. Looks like it may only be a relatively small loss - 5%-10% of TVL.
We'll know the full impact once they work out how much exactly has been taken, and trading resumes.
My jumpy-ness is intensifying.
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Damn, I had been buying Osmosis. I bet I just got zeroed.... again
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Won't be zero, but I'd expect a further price drop when the chain restarts.
Waiting to see details on how much is lost, but it seems only a small portion of TVL.
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Oh yeah not to bad. Good stuff because I am about to restart Skippy with a new lease on life. Was going to take your advice and head over to Osmosis.
I've spent a fair bit getting it going and bit sad to walk away from it now that UST killed a big chunk of it. Terra effectively burned 100 Million tokens. But the infrastructure for Skippy is still there. It is Cosmos supported. Was going to do some work to get it onto Osmosis.
New article dropping tomorrow.
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Seems like around $5 mill lost. TVL was around $200 mill, so a wound but not fatal.
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Just a couple of days after Elrond. I guess that's how these DEXs have to mature.
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Seems everything has to go through some kind of attack or issue as part of the process. Looks like this one is minor, and at least some of the funds will be recovered, so I guess it could have been worse.
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It's halted again. Although I don't have a lot of Osmosis token, it's staked on cosmos chain. I wonder if it will be affected !
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The staked OSMO shouldn't be affected, other than by the price depreciation of OSMO.
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It was just a small amount. Thanks !
When the chain restarts I'd expect a little price drop, maybe. Staked tokens are unaffected.
Hopefully just a minor hiccup, and the issue will be fixed without too much damage done.
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Nice to know, thank you !
Compared to what happened with UST, this seems like a minor incident (I don't think minor is the right word for it though, it is serious because funds were lost and it led to a forced chain halt). But following that, it might bruise OSMO price further.
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Looks like around $5 mill, 2.5% of TVL so minor in the scheme of things. At least a couple mill of that is to be returned by the people who exploited, so its not too damaging in the scheme of things.
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Looks like the chain hasn't been restarted yet though.
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More fun and games for the Cosmonauts.
I saw it on Twitter this morning as it was developing, I dare say the price will get a wee skelp again.
The optimist in me is thinking it is good time to grab some more positions.
Many thanks for the updates though:)
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Hopefully OSMO will hit its bottom soon, maybe this will be where that happens.
Inflation drops by 1/3 soon, so hopefully that will be a catalyst for higher prices. Now could be a good opportunity, if I had any spare funds I'd be seriosuly considering it.
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Yes we shall see, it does seem a good time, I need to see if I can do some juggling and free some funds up:)
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