Validators stop the network and use Osmosis DEX on Cosmos to make $5 million
Osmosis, the Cosmos ecosystem’s largest decentralised exchange (DEX), was suspended this morning.
In the wake of a severe issue in its liquidity pools that led to an approximate $5 million exploit, the core development team and network validators halted the chain at block #4713064.
A vulnerability was initially reported by a Reddit user who cautioned that the position would climb by 50% if monies were deposited to an Osmosis pool and then withdrawn.
Transactions on the Osmosis blockchain demonstrate that even before the network was shut down, users were already taking advantage of the vulnerability to drain cash from the system. There is still some mystery around this problem, but the Osmosis team revealed that it let malevolent users steal $5 million in assets from liquidity pools by exploiting its flaw.
There was no “total draining” of the liquid ponds. The Osmosis team said in an official statement that they were trying to solve the flaw, estimate the losses (estimated to be in the neighbourhood of $5 million), and plan for recovery.
The Osmosis DEX and its native wallet remain inaccessible for the time being because of the chain stop. To prevent the network from having to be rebooted, the team is now working on a fix.