The price of Avalanche’s AVAX tokens on the decentralized exchange (DEX) GMX was manipulated by a smart crypto trader using millions of dollars, who made profits of up to $500,000 by employing a method that took advantage of a simple flaw. GMX Held Pairing of Traders The pairing of traders between users of decentralized finance (DeFi) is done by GMX, like other DEXs, using smart contracts. Decentralized finance covers transactions made on a blockchain that does not involve a third party. Since its launch in 2021, DEX has executed more than $45 billion in trading volume, allowing individuals to trade spot and perpetual futures using its on-chain trading interface at minimal costs. The Basic Loophole The flaw is that GMX allows customers to trade at zero slippage, which is the gap between the estimated price of a trade and the price at which the deal was executed. But since all pricing information on GMX comes from centralized exchanges like Binance or FTX, a trader might acquire a lot of tokens. In this example, AVAX—on 0% slippage, quickly raises prices on those exchanges by putting buy orders there and then quickly increases the value of the initial position by selling it on GMX. @GMX_IO should have honestly put a cap way earlier to avoid those issues due to 0% price impact, not hard to do, especially that you have been warned and aware that such manipulations were possible. pic.twitter.com/m2RjTsc6uh — Atlas (@AtlasIsMe) Sep...
