Crypto exchanges have had a rough go of it in recent weeks. As if broader market volatility weren’t enough, many of these trading floors are suffering from hacks and exploits. Osmosis (OSMO-USD) is the latest of these victims; the fledgling DEX just lost out on $5 million as a result of an on-chain exploit. Now, OSMO crypto prices are dropping on the news, causing developers to put a freeze on all activity. Luckily, though, they caught the bug before things got much worse.
Osmosis is a fairly new DEX in a wide field of competition. It launched in 2021, with its native OSMO asset launched in October. Still, it has been able to make a name for itself; in Osmosis’ short history, the exchange has been able to accumulate over $212 million in total value locked (TVL) on the chain.
That fast growth can be attributed to the robust nature of the project. While many DEXs exist as decentralized apps (dapps) atop other chains, Osmosis is its own dedicated blockchain network. Built with Cosmos’ (ATOM-USD) Inter-Blockchain Communication (IBC) technology, it can quickly and easily communicate with any number of chains under the Cosmos umbrella. This way, Osmosis can build out its own network of dapps and have the benefits of a dedicated chain while still having the support of a larger ecosystem.
Osmosis Chain Suffers $5M Exploit, Halts Activity
Although the Osmosis Chain is solidly built and full of products and liquidity, it’s not impervious to the odd bug. Today, the DEX has fallen victim to an exploit rooted in a flaw on the Osmosis trading floor.
A user on Reddit called attention to the flaw on the Osmosis DEX. This user found that if one adds liquidity and immediately withdraws it, the network gives back 50% more assets than originally deposited. If one were to repeatedly add and withdraw assets, they could theoretically drain all of the network’s liquidity pools.
It took the Osmosis development team only 12 minutes to see and respond to the exploit. They promptly froze the chain, keeping people from using Osmosis products — and bad actors from exploiting the bug. In that short amount of time the network saw about $5 million in assets drained from Osmosis Chain liquidity pools. While that’s a hefty amount, it doesn’t hold a candle to the $212 million total at risk, had developers not acted so quickly.
Developers have been keeping users updated on the status of the network on Twitter (NYSE:TWTR). As of this morning, they claim to have come up with a patch to remedy the bug. Testing is now underway to ensure no new problems arise from the patch, although the network is not being explicit in how long it will take to upgrade nodes and unfreeze the chain.
In the meantime, the OSMO crypto is taking a bit of a hit on the news. The native coin of the Osmosis Chain is trading down by nearly 6% over the past 24 hours.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
