Hello everyone...
In the world of cryptocurrencies there will always be times where vulnerabilities are exploited and serious consequences are seen. We have already seen that in other places like defi or blockchains that suffer attacks or hacks and a lot of money is stolen.
And this time it was the DeFi Osmosis protocol that has been hacked and it is estimated that more than $5M has been stolen from the liquidity pool. This affects not only the liquidity pool, but also the trust that users have in the protocol and the currency.
What happened?
The Osmosis network was halted by developers and validators at 02:57 UTC, following the alarming suspicion of an exploit that may have led to around $5 million of liquidity funds being drained. The exploit bug was discovered by a user on Reddit where he reported that when someone deposited funds into a liquidity pool and instantly deleted it, the withdrawal somehow increased by 50%.
Which caused some users to execute the bug repeatedly, taking millions of dollars with them. This caused alarm bells to go off and the network to be shut down and although reports were issued with implausible information that all liquidity pools could have potentially been exhausted. the reality is that the osmosis group on Twitter detailed that Liquidity pools were NOT "completely drained". Developers are troubleshooting the error, assessing the size of the losses (likely in the ~$5 million range) and working on recovery.
But this did not stop the panic, as these rumors about a theft or complete draining may continue to spread, as so far the chain is still off. This has also affected the price of OSMOS where it has so far lost approximately 10% of its price.
So far the Osmosis team on twitter has posted some words of encouragement to calm users while trying to resolve the situation:
Thank you for being patient as the core teams have been heads down dealing with the situation. The following is the latest information related to the bug and subsequent chain halt.
We are strongest together. Expect much more communication from us and other community members in the coming days. Let us take this crisis as an opportunity to grow better.
We are thankful for being surrounded by such an incredible community of Osmonauts. The number of users, developers, validators, and community members that have rushed to the support of the protocol during this time has been astounding.
As soon as these are resolved, we will turn to share more in-depth analysis of what happened and the learnings that we will commit to. Osmosis will continue to push the frontier. That’s who we are. But the speed of innovation cannot come at the cost of security.
Honestly, this seems very serious, since it's been more than 20 hours since this happened and they still haven't given a concrete answer, and it is expected to take at least 2 days before the network is shut down. So you may have to prepare for some surprise or also for the huge amount of FUD that will be spread.
What do you think about this hack to the osmosis defi protocol, do you think it will recover or do you think it will sink? Let me know your opinion.
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