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Wednesday, September 28, 2022

GMX Has Suffered An Exploit In The Price Manipulation Worth $565K

GMX, a famous decentralized exchange has recently gone through an immense price manipulation exploit from an anonymous exploiter who managed to run away with around $565k from the USD market. This exploiter has also been considered to move towards capitalizing on the minimal spread and zero price impact of the exchange to pull this exploit off- which definitely impacted the token holders of GLP who had previously provided some form of liquidity in the form of the Avalanche token to the crypto exchange.

The company later confirmed this exploit in the price manipulation in a Twitter post on the 18th of September but also stated that the market of USD would still be open despite the imposition of a $2 million cap on long positions, and a cap of $1 million on the short positions. 

GMX Gets Ripped Off By Exploiter

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Joshua Lim, the Head of Derivatives at Genesis, was incidentally the first person to analyze the exploit at GMX- stating that the exploiter had been able to run off with the profits that had been secured from the USD market by opening several large positions at 0 slippages. After that, the exploiter started transferring the USD to centralized exchanges at a slightly increased price.

Lim mentioned that this method of exploitation had taken place around five times, with the very first cycle coming into effect on the 18th of September at 1:15 UTC. Each of the cycles had been transferred for more than 200,000 AVAX tokens, with the exploiter being able to extract around $565,000 in profit after having paid to market makers on several other exchanges. 

Nevertheless, Joshua Lim also mentioned that this really wasn’t an exploit- as GMX had been working as designed- and nothing really seemed to be different from what it was before.

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