Many crypto exchanges are frustrated as they are dealing with two unfavorable factors at the same time. The market is bearish and to make matters worse, fraudsters would not stop exploiting them. Recently, Osmosis suffered an attack from hackers and they stole away $5 million in OSMO.
The Attack On Osmosis
Osmosis is a decentralized exchange established on the Cosmo blockchain. It was created in 2021 and its native token, OSMO, was launched in October last year.
Despite the tender age of the project, it has gained a name for itself in the DeFi industry. It reportedly gathered a huge total locked value of $212M in a very short while which is rather impressive.
Osmosis is vibrant, secure, and has adequate liquidity and use cases. However, it suffers from bugs from time to time. This is evident as it was exploited on Wednesday.
According to reports, the DEX project unexpectedly suffered a midnight attack on June 8th. It happened that unknown perpetrators reportedly maneuvered a liquidity pool bug to steal $5M in OSMO.
The report also revealed that the project developers quickly halted the attack at its prime. However, they were not quick enough to stop them from exploiting two blocks.
How It All Played Out
According to the exchange’s analyst, the attack began when a Reddit user discovered the bug on the platform. He then posted that for every deposit to a liquidity pool, a user can withdraw an extra 50% of the funds deposited.
He further narrated that the funds in the pool would be drained in no time if users repeat the act multiple times.
The DEX’s team discovered the post after 12 minutes when it was posted. They immediately swung into action and froze the project temporarily. But it was too late because $5M had been looted away already.
According to blockchain data, an OSMO user deposited 26 OSMO and withdrew 39 instead, looting 13 OSMO. Another tracked transaction showed a user who deposited 101,230 tokens and withdrew 151, 084 OSMO tokens instantly.
In total, six users were involved in the theft that looted $5M. A news source revealed that two of the looters claimed to have participated unintentionally.
Furthermore, they have promised to turn in their portion of the loot in full. However, the other four looters are still silent on the matter.
Osmosis Promised To Improve Security
Many users are troubled by the incident and they are in doubt about the safety of their funds. However, Osmosis tweeted to calm them that the exploited pool was not drained completely. They promised to fortify the system while assuring that users’ funds are safe.
A day before the attack, Osmosis accrued about $11.8M from daily transaction volume. However, a day after the attack the OSMO token lost 6% of its market value.