GMX Confirms $40M Exploit On V1, Suspends Trading And Proposes 10% White Hat Bounty For Fund Recovery
In Brief
GMX’s decentralized exchange experienced a $40 million exploit on its V1 GLP pool on Arbitrum, leading to a suspension of V1 trading while investigations continue, though GMX V2 and its token remain unaffected.
Decentralized perpetual exchange, GMX, reported that the GLP pool on GMX V1, operating on the Arbitrum network, was exploited. An estimated $40 million worth of tokens was transferred from the pool to an unidentified wallet.
The GMX development team has stated that an investigation is underway to determine how the exploit occurred and to identify the underlying vulnerability. External security partners are also participating in the review process to ensure a complete assessment of the incident and to help mitigate any related risks promptly.
Following the exploit, trading activity on GMX V1 has been suspended, along with the minting and redeeming of GLP on both the Arbitrum and Avalanche networks. This action has been taken as a precaution to eliminate further attack vectors and limit potential user exposure.
Initial findings, developed in collaboration with the project’s primary security partners and lead auditor, indicate that the exploit is confined to GMX V1. The vulnerability appears to be associated with the calculation of the short average price on the V1 protocol.
GMX has clarified that GMX V2, including its trading markets and liquidity pools, remains unaffected by the exploit. The GMX token itself is also reported to be secure and has not been impacted by the event.
Blockchain security firm PeckShield has observed that approximately $9.6 million in cryptocurrency has been bridged by the exploiter to the Ethereum network.
In response, GMX has sent a message directly to the address linked to the incident, acknowledging the presence of the vulnerability. The protocol has expressed willingness to offer a 10% white hat bounty if the remaining 90% of the misappropriated funds are returned within a 48-hour timeframe. GMX has also stated that, should the conditions be met, no further legal action will be pursued.
GMX: What Is It?
GMX supports on-chain spot trading and perpetual futures contracts with leverage of up to 50×, though some references suggest leverage as high as 100×. The platform operates on both the Arbitrum One and Avalanche networks.
Trading activity, including both spot and perpetual markets, is conducted through a single multi-asset liquidity pool referred to as GLP. This pool holds a diversified mix of large-cap cryptocurrencies and stablecoins. Liquidity providers can contribute approved assets to the pool in exchange for GLP tokens, which are automatically staked. In return, GLP holders receive a share of approximately 70% of the platform’s trading fees along with additional rewards in the form of escrowed GMX, or esGMX.
The first version of GMX, GMX V1, was structured around the GLP pool model, where liquidity providers deposited a combination of assets such as BTC, ETH, stablecoins, and selected altcoins. This model allowed users to execute large trades without experiencing price impact.
The upgraded version, GMX V2, introduced a new liquidity structure featuring isolated GM pools, each designated for a specific trading pair. These pools are supported by two types of assets: a long token representing the volatile asset, and a short token typically in stablecoin form. This design isolates risk on a per-market basis and allows liquidity providers to manage exposure more precisely, avoiding the broad market exposure inherent in the V1 model.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
