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Arbitrum-Based Liquidity Protocol Exploited For $7.5M

Arbitrum-Based Liquidity Protocol Exploited For $7.5M WikiBit 2023-05-29 09:39

The recently launched version 2 of Jimbos Protocol, an Arbitrum-based liquidity protocol, experienced an exploit resulting in a loss of $7.5 million within a mere three days.

Just three days after the launch of its version 2, the Jimbos Protocol, built on the Arbitrum network, fell victim to an exploit that resulted in the loss of 4090 ETH, equivalent to $7.5 million.

PeckShield, a renowned security firm, identified that the hack was made possible due to the protocol's inadequate control over slippage for the tokens it managed.

Hacker used $5.9 million flash loan to exploit Arbitrum-based protocol

According to a report by PeckShield, the recent hack on the Jimbos Protocol can be attributed to the absence of proper slippage control during liquidity-shifting operations. This allowed the attacker to exploit the imbalanced price range by executing a reverse swap for profit, taking advantage of the protocol-owned liquidity.

In order to carry out the attack, the hacker utilized a flash loan totaling $5.9 million.

Following the incident, Jimbos Protocol took to Twitter and acknowledged the exploit, stating that they are actively cooperating with law enforcement and security experts. They have assured the public that further information will be shared as it becomes available.

Tokens price falls 40%

Following its launch on May 16, the Jimbos Protocol, built on the Arbitrum network, encountered a smart contract bug that rendered the protocol inoperable. In response, users were advised to refrain from interacting with version 1 and await the release of version 2.

Subsequently, the price of the protocol's token experienced a significant decline, dropping by 25% from $0.25 to $0.15 in the aftermath of the version 2 hack.

The primary objective of this DeFi protocol was to tackle liquidity and mitigate the impact of volatile token prices by implementing a novel testing approach. However, it appears that the mechanism employed by the protocol was insufficient, creating favorable conditions for malicious actors to exploit.

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