DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token


A savvy crypto trader deployed millions of dollars to manipulate the prices of Avalanche’s AVAX tokens on the decentralized exchange (DEX) GMX, taking profits of upwards of $500,000 by utilizing a strategy that exploited a basic loophole.


GMX, like other DEXs, relies on smart contracts to match traders between decentralized finance (DeFi) users. Decentralized finance refers to trading activities carried out on a blockchain without the use of a third party.


DEX allows users to trade spot and perpetual futures using its on-chain trading interface at low fees and has processed more than $45 billion in trading volume since its inception in 2021.


However, the loophole is that GMX offers trading to users at zero slippage, or the difference between the expected price of a trade and the price at which the trade is executed. But all pricing data on GMX is derived from centralized exchanges, such as Binance or FTX, meaning a trader could buy a large number of tokens, such as AVAX in this case, on zero slippage, rapidly drive up prices on centralized exchanges by placing buy orders on those venues and selling the initial position on GMX at higher prices.


It’s important to note that this strategy will not work on two centralized exchanges, as a trader placing high bids on one venue would mean prices automatically move higher on that exchange and other exchanges immediately raise the price of assets on their own systems – meaning the strategy is unlikely to net any profits.


In several tweets on Sunday, Genesis Trading head of derivatives Joshua Lim said the trader exploited the GMX loophole some five times, netting over $500,000 to $700,000 in total profits. Security firm PeckShield also pegged the gains at $565,000 on Sunday morning in a tweet that’s since been deleted.


The trader put on positions of between $4 million to $5 million each time, Lim said, and extracted over $158,000 in the first trade they did. He added that this wasn’t a typical exploit as GMX worked “as designed.”


GMX developers said late Sunday that they were reviewing the loophole and had, in the meantime, capped open interest, or the number of unsettled futures contracts, at $2 million for AVAX on their exchange. A key developer said a solution can be expected some two weeks from now.


GMX’s native tokens fell 12% in the past 24 hours amid a broader market decline, extending two-week losses to over 30%, data shows.


免责声明:本文章仅代表作者个人观点,不代表本平台的立场和观点。本文章仅供信息分享,不构成对任何人的任何投资建议。用户与作者之间的任何争议,与本平台无关。如网页中刊载的文章或图片涉及侵权,请提供相关的权利证明和身份证明发送邮件到support@aicoin.com,本平台相关工作人员将会进行核查。


【广告】【重大利好】邀请合约高手联合组建内部交流群,群内成员已十连胜,现免费开放200个名额,挑战一周获利10倍,喜欢合约朋友速添加QQ内部交流群号:425849897

发表评论

暂时没有评论,赶紧抢沙发吧!