Decentralised trading platform GMX has confirmed a major security incident on its V1 protocol, leading to an estimated loss of around $40 million in tokens. The exploit, which targeted the GLP liquidity pool on Arbitrum, caused GMX Coin to plunge to $11.50—down nearly 25% within hours.
The Dey There team reviewed the technical response and market reaction, offering insights into what traders can expect in the coming days. While the decline appears to have stabilised near $11.80, investor sentiment remains fragile and highly reactive to future announcements.
Details of the Attack and Platform Response
According to an official statement, the exploit was isolated to GMX V1 on Arbitrum and did not impact GMX V2 or its native token directly. The GLP minting and redemption processes, along with all V1 transactions, have been paused on both Arbitrum and Avalanche to prevent further damage.
“Security has always been a top priority,” the GMX team noted. “All core contributors are currently investigating the attack vector and root cause.”
In a follow-up advisory, GMX recommended that forks of its V1 protocol immediately disable leverage features and set maxUsdgAmounts to “1” to prevent further GLP minting vulnerabilities. Importantly, a value of “0” would allow unlimited minting—a critical distinction for developers.
Will There Be Compensation?
As of now, no compensation program has been announced. This uncertainty is adding to the volatility. If a refund or insurance model is introduced promptly, it could trigger a short squeeze and push the price higher, with short positions being forcefully liquidated.
Key levels to watch in a bullish reversal scenario include $13.00 and $13.60. These zones could act as upper wicks in a recovery spike. However, if no compensation is provided or sentiment worsens, the next strong support lies at $9.50—a zone tested during April’s flash crash.
Technical Risk: High Volatility on Both Sides
The current setup presents risk in both directions. High leverage positions—long or short—are dangerous due to ongoing uncertainty. Any headline about recovery funds or additional losses could trigger extreme price action. Dey There advises caution, especially as price action consolidates within a volatile range.
Conclusion
While the hack has undoubtedly shaken confidence in GMX V1, the incident appears contained for now. With transparency, swift communication, and possible restitution, the platform may be able to recover user trust. Until then, GMX Coin remains a high-risk, high-reward asset.
References:
- GMX Official Post-Mortem Updates – gmx.io
- Arbitrum Blockchain Explorer – arbiscan.io
- DeFiLlama Protocol Analytics – defillama.com
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