Decentralized Exchange GMX Witnessed Price Manipulation Worth $565K
- Perpetual Exchange GMX has recently reported a price manipulation exploit that drained off around $565,000 from the AVAX/USD market, and the entire cryptosphere is talking about it.
- The unidentified attacker reportedly managed to capitalize on “zero price impact” and “minimal spread” features to pull off the attack.
- According to CoinGecko, the GMX token (GMX) is currently trading at $40.25, a drop of 15.3% over the last 24 hours.
Renowned Decentralized spot and Perpetual Exchange GMX has recently reported a price manipulation exploit that drained off around $565,000 from the AVAX/USD market.
The unidentified attacker reportedly managed to capitalize on “zero price impact” and “minimal spread” features to pull off the attack. This severely impacted the GLP token holders who provide liquidity to GMX in the form of Avalanche’s native token AVAX.
GMX acknowledged the price manipulation exploit in a Twitter post on September 18 but added that while imposing a $2 million cap on long positions and a $1 million cap on short ones, the AVAX/USD market would continue to be open.
The exploit was analyzed by multiple crypto experts, including Joshua Lim, Head of Derivatives at Genesis Trading, who stated that the attacker “successfully extracted profits from GMX’s AVAX/USD market by opening large positions at 0 slippage” and transferred the AVAX/USD to centralized exchanges at a slightly higher price. This according to Lim, was repeated five times with each cycle transferring over 200,000 AVAX tokens. Notably, the exploiter made $565,000 in profits after paying spreads at market makers on other trading platforms.
However, Lim emphasized that the act shouldn’t be called an “exploit” by stating:
“This isn’t an exploit as much as GMX working as designed! [The so-called “exploiter”] executed large trades in against GLP holders with 0 slippage: at the oracle price without factoring any price impact in the real world, putting on risk requires you to pay liquidity providers on the opposite side.”
The most recent “exploit” happened just a few weeks after Layer-2 DEX founder ZigZag “Taureau” expressed skepticism about the long-term sustainability of GMX’s exchange platform in an interview on September 2. At the time, he warned that a trader using the right tactics may wipe out GLP token holders.
The GMX community’s response to the announcement was mixed.No smart contract was taken advantage of, one side of Twitter community noted, while another questioned GMX about whether any impacted GLP holders would receive compensation.
According to CoinGecko, the GMX token (GMX) is currently trading at $40.25, a drop of 15.3% over the last 24 hours.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
