Gamma Strategies Witness Major Hack Drained Ethereum

• As per the blockchain investigator PeckShield, the DeFi platform Gamma Strategies lost nearly $3.4 million in a hack.  
• Following the incident, the platform’s native token plunged by 50%.

Gamma Strategies, a decentralized finance (DeFi) platform that provides active liquidity management and market-making strategies, suffered a major security breach this week. A hacker exploited a vulnerability in the platform’s smart contract and drained over $3.4 million worth of Ethereum from its liquidity vaults.

The hacker used a sophisticated technique to manipulate the price of Gamma’s native token, GAMMA, and inflate their withdrawal amount. The hacker was able to mint more pool tokens than they deposited, and then withdraw them at a higher value. The attack resulted in the loss of about 1,500 Ethereum, which was worth around $3.4 million at the time of the hack.

Source: PeckShieldAlert tweet on X

The price of GAMMA also plummeted by about 50% after the incident, investors panicked because of the incident. The hacker has already laundered over $2 million of the stolen funds via Tornado Cash, a privacy-preserving mixer service, according to PeckShield, a blockchain security firm that investigated the incident.

Gamma Strategies Reacts to the Hack

Gamma Strategies responded to the hack by freezing deposits to prevent further losses. However, the platform kept its vaults running for legitimate users and said it would compensate the affected users and implement measures to prevent future attacks.

The platform also outlined the flaw that allowed the hacker to override its safety mechanisms through carefully orchestrated transactions targeting price data. The platform relied on restricting deposits during significant volatility shifts, but the hacker found a way to manipulate prices before deposit approval and mint far more pool tokens than was justified.

Source: Etherscan

Gamma Strategies also did something unusual and rare in the DeFi space: it contacted the hacker’s wallet and offered a bug bounty for returning the stolen funds. The platform indicated openness to a negotiated bounty payment to regain as much crypto as possible.

The platform said it was working with PeckShield and other security experts to investigate the incident and recover the funds. The platform also said it would conduct a full post-mortem and code review to bolster its security before reactivation.

The hack of Gamma Strategies is one of the many examples of how DeFi platforms are vulnerable to code exploits and flash loan attacks, which have become more common and sophisticated nowadays. DeFi users and developers should be aware of the risks and challenges of this emerging sector, and take precautions to protect their funds and data.

Disclaimer

The information contained in this article is intended for informational and educational purposes only. It should not be construed as financial, investment, or trading advice. Investing and trading involve risk, and you should carefully consider your own circumstances and risk tolerance before making any investment decisions.