Vulnerabilities in the DeFi ecosystem: analysis of the $3.4 million exploit on Gamma Strategies

Recently, an attack has hit the Gamma Strategies DeFi protocol, causing an estimated loss of 3.4 million dollars. 

In response, the protocol has temporarily disabled deposits in its DeFi vaults, while withdrawals remain active. Let’s see all the details below. 

The attack on DeFi Gamma Strategies protocol damages

As anticipated, Gamma Strategies’ decentralized finance (DeFi) protocol has been subject to an exploit that has caused a loss of approximately $3.4 million, according to security experts.

In response to the incident, the protocol immediately adopted precautionary measures to prevent further losses. 

The team has temporarily disabled deposits in all its public DeFi vaults, while ensuring that withdrawals remain active for users who need to access their funds.

In addition, the team has stated the following:

“Our vaults will continue to operate normally for the time being, but deposits are currently suspended until we resolve and mitigate the issue.”

The security companies PeckShield and BlockSec have both confirmed that the incident has caused an estimated loss of 3.4 million dollars, with the hacker managing to steal over 1500 ether. 

According to BlockSec’s analysis, the incident highlights a critical vulnerability in the “accounting mechanism” of the protocol.

The founder of BlockSec, Yajin Zhou, has indeed explained to The Block the following: 

“The main cause lies in the inconsistency between the accounting mechanisms for deposit and withdrawal used by Gamma Strategies, which results in a discrepancy between liquidity and shares. Exploiting this, the attacker was able to withdraw an excessive amount of tokens.”

We remind you that Gamma Strategies, a decentralized asset management protocol based on Ethereum and other blockchains, allows users to deposit funds into pools called “hypervisors”.

Furthermore, it allows you to earn a return on your investment through active liquidity management and market-making strategies.

Gamma Strategies and KyberSwap: the financial challenges

During the aforementioned issue, a fake post on social media attracted more attention and engagement than Gamma’s original tweet warning about the security incident.

This development highlights the importance of verifying information from official sources and exercising caution while navigating the crypto space. 

In fact, investors have been urged to double-check all links and ensure that their interactions with Gamma occur exclusively through official channels.

Meanwhile, another important player in DeFi, KyberSwap, is facing financial difficulties following an exploit that resulted in a loss of 49 million dollars.

KyberSwap has taken drastic measures to support its business operations, including a 50% reduction in workforce to preserve financial stability.

In an attempt to mitigate the financial impact of the exploit, the CEO of Kyber Network, Victor Tran, has announced a temporary pause on liquidity protocol initiatives and the KyberAI project. 

Despite these temporary suspensions, KyberSwap’s main business functions, such as Aggregator and Limit Order functionalities, remain operational.

Gamma Strategies and KyberSwap are now in difficult circumstances as they respond to the exploits that have shaken their respective ecosystems. 

Therefore, Gamma Strategies is currently investigating a potential loss of $500,000 and is working to identify those responsible. In the meantime, KyberSwap is taking measures to adapt and address a significant financial setback.

Radiant Capital is also under attack: $4.5 million in Ethereum stolen

Even the cross-chain lending protocol, Radiant Capital, has recently suffered an attack according to what was shared by PeckShieldAlert through account X.

The attack has caused the theft of 1.9 thousand Ethereum, with an approximate value of 4.5 million dollars.

Radiant Capital promptly accepted the hacking incident, attributing it to an issue encountered in the newly established local USDC market on Arbitrum (ARB).

In an official statement, the Radiant DAO Council stated the following: 

“Today we received a report of an issue with the newly created USDC native market on Arbitrum. The Radiant DAO Council has temporarily suspended lending/borrowing markets on Arbitrum while the issue is further investigated. None of the available funds are at risk. No transactions can be made on Arbitrum until the markets are reactivated. Once the issue is fully resolved, a detailed report will be issued and normal operations will be carried out according to the Arbitrum protocol once the investigation is completed.”

Despite a brief drop in the value of the RDNT token of about 3% following the incident, the cryptocurrency has recovered and is currently trading at around $0.325.