The Levana perpetual swap protocol on the Osmosis blockchain underwent a severe exploit. Over 13 days, an unauthorized party drained more than $1.1 million from Levana’s liquidity pools. This incident, marking a significant setback for the protocol, resulted in losing 10% of its liquidity.
Root Causes Identified
Investigations into the incident revealed a multifaceted cause. Attackers exploited a congestion attack on the Osmosis blockchain, severely limiting user interactions with the market. This situation worsened due to a flaw in the Osmosis fee market code. During periods of high traffic, the gas prices set needed to be increased for transactions or bot maintenance.
Additionally, the exploit capitalized on “price staleness” in Levana’s integration with the Pyth oracle. This combination of factors enabled the attackers to manipulate market prices and drain the liquidity pools. Despite these challenges, Levana’s team emphasized that the Pyth oracle functioned as expected,
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