GMX, a decentralized exchange (DEX) has recently suffered a manipulation. The reports claim price manipulation has been witnessed by the DEX. The exchange has reportedly suffered from an exploit that was carried out by an exploiter.
Around $565k Exploited
The reports confirm that as a result of the exploit, it was around $565,000 that the exploiter was able to take off. The details show that it was the AVAX/USD market where the exploiter managed to exploit the mentioned amount.
Two Features Exploited
For now, the identity of the exploiter is unclear and the investigation teams are trying to search for him. In the meanwhile, the investigation report has confirmed that the exploiter was able to misuse two features to his favor.
The investigation report shows that the exploiter was able to use the “zero price impact” and the “minimal spread” features. Using the features, the exploiter was able to exploit the protocol.
The exploit ended up causing an impact on the tokenholders of GLP. The holders of the GLP token were reportedly responsible for providing liquidity using the Avalanche (AVAX) token. The liquidity was provided in the form of AVAX to the particular exchange.
GMX Reported the Exploit on Sunday
It was on Sunday when the GMX officials announced via Twitter that price manipulation had taken place on their exchange.
Following the exploit, the GMX executives revealed that they would not discontinue their particular features and the liquidity pool.
Still, it was announced that a limit had been imposed on the short and long positions. As per the announcement, a $1 million limit had been imposed on the short positions while a $2 million limit had been imposed on long positions.
The First Exploit Analyzer
Joshua Lim, the Genesis Trading head of derivatives was the first to discover the exploit and analyzed it. Lim revealed that the exploiter was able to successfully extract the GMX profits from the AVAX/USD market.
The exploiter proceeded with choosing 0 slippages when opening large positions. After that, the exploiter moved the AVAX/USD pair to the centralized exchange.
The exploiter did it by increasing the price of the pair a bit as they landed in the centralized exchange.
Repetition of the Exploit
Lim stated that the exploiter repeated the method and was able to accumulate a high amount in five attempts. With each attempt, the exploiter was able to transfer over 200,000 AVAX. At the time of writing, the particular figure translates to over $4 million.
As a result of the exploit, the exploiter successfully generated a profit of $565,000 after clearing the market makers for the spread.
Following the exploit, the value of GMX has dipped 16.7% in a 24-hour window, and the token now trades at $39.07.