Arbitrum-Based Liquidity Protocol Exploited For $7.5M

Jai Pratap
May 28, 2023
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ETH, WBNB, USDC Stolen As Radiant Capital Suffers $50M Loss

The Arbitrum-based Jimbos Protocol has been exploited for 4090 ETH worth $7.5 million three days after its version 2 launch.

PeckShield reported the hack was enabled by the protocol’s lack of control over slippage for the tokens under its control.

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

This hack is due to the lack of slippage control of liquidity-shifting operations — such that the protocol-owned liquidity is invested into a skewed/imbalanced price range, which is exploited in reverse swap for profit, PeckShield reported.

The liquidity protocol hacker made use of a $5.9 million flash loan to carry out the attack.

“We are aware of the exploit regarding our protocol and are actively in contact with law enforcement and security professionals. We will release further information when possible,” Jimbos Protocol tweeted.

Read More: Scam Tokens Ride The Wave Of Meme Coin Mania

Token’s price falls 40%

The Arbitrum-based Jimbos Protocol was initially launched on May 16. But shortly after its launch, a smart contract bug halted the protocol from working. Users were told to not interact with version 1 and wait for version 2.

The token’s price has fallen 25% from $0.25 to $0.15 after the hack of the version 2.

The Defi protocol aimed to address liquidity and volatile token prices through a new testing approach. But it seems that the protocol’s mechanism was inadequate that created favorable conditions for attackers.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Jai Pratap is a Crypto and Blockchain enthusiast with over three years of working experience with different major media houses. His current role at CoinGape includes creating high-impact web stories, cover breaking news, and write editorials. When not working, you'll find him reading Russian literature or watching some Swedish movie.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.