After a bug threatened to sap the chain’s liquidity, Osmosis, a layer-1 blockchain on the Cosmos network, was suspended on Wednesday.
Validators intervened to stop block production after discovering a new bug that allows users to gain 50% extra when withdrawing their deposits from a liquidity pool.
Users took advantage of this and threatened to deplete all of the chain’s liquidity. But Osmosis was able to stop the chain in time, minimizing its losses to roughly $5 million. During the procedure, ATOM and OSM tokens were withdrawn.
According to data from DeFi Llama, the protocol is the 83rd largest DeFi player by total value locked, with around $212.8 million. Its TVL has dropped by 1.7% in the last 24 hours, likely reflecting the bug.
Osmosis is attempting to recover from the crippling loss
A Reddit user on Osmosis’ official subreddit was the first to notice the bug. While Users initially dismissed the report, they immediately changed their minds after trying it themselves.
Considering the bug’s nature, it could completely drain Osmosis’ liquidity pools. However, the loss appears to be limited to $5 million.
Liquidity pools were NOT “completely drained”. Devs are fixing the bug, scoping the size of losses (likely in the range of ~$5M), and working on recovery.
The bug was discovered just after the V9 Nitrogen upgrade went live on Tuesday. Osmosis has been halted at block #4713064, according to a validator.
The OSM token has lost roughly 7% amid pilfered actions
The blockchain’s native token, OSM dropped approximately 7% after the report of the bug. Users who took advantage of the flaw seem likely to have dumped their stolen tokens.
OSM is currently trading at $1.06, a record low. The Cosmos native token, ATOM, has also dropped 1% in the last 24 hours.
Due to their exposure to the Terra crisis, the value of Osmosis and Cosmos has plummeted this year. Previously, Terra was the largest project on the Cosmos network.