Gamma Strategies was Hacked, Affecting Many Other DEXs

Gamma Strategies was hacked, affecting many other DEXs

On the morning of January 4, 2024 (UTC Time) on social networking platform X (Twitter), PeckShield issued a warning that the Algebra protocol had been hacked, with an initial loss of about 3.4 million USD.

👀👀👀 We’ve observed a few in-the-wild exploitations.
The exploiter has stolen ~$3.4M worth of cryptos and bridged them from #Arbitrum to #Ethereum https://t.co/pAcU3FBYle

— PeckShield Inc. (@peckshield) January 4, 2024

The attacker quickly transferred these assets from the Arbitrum network to Ethereum.

Although a relatively new name to the community, Algebra is a popular DEX aggregator, integrated into many DEX exchanges such as QuickSwap on the Polygon network and Camelot on Arbitrum.

However, security experts quickly clarified that the error was not from Algebra but from Gamma Strategies. Gamma Strategies is an asset management protocol that provides active liquidity management (ALM) strategies to liquidity providers (LPs). Gamma Strategies uses smart contracts to automate the process of rebalancing liquidity pools to support LPs and minimize risks from Impermanent Loss.

The Gamma project has also issued a notice confirming that their protocol is experiencing security vulnerabilities and encourages users to revoke their wallets.

We’re monitoring and reacting to a possible security incident. Please be patient while we take security precautions to assess the issue. If you needwith draw our front end is still up at https://t.co/p5JwV003JJ

— Gamma (@GammaStrategies) January 4, 2024

Both decentralized protocols integrating solutions from Algebra and Gamma have confirmed their safety. DEX Camelot on Arbitrum also announced that it has unlocked Gamma’s NFT vaults so users can withdraw funds, to avoid further problems.

Update: Gamma Security Incident

– Gamma has paused deposits on their vaults, which should prevent further exposure
– Camelot core protocol / Algebra remain fully safe and unaffected
– Exploit seems to have only targeted Gamma’s stable vaults
– Whilst the issue should be…

— Camelot (@CamelotDEX) January 4, 2024

Additionally, Algebra also confirmed that its protocol is completely secure and unaffected.

It’s not connected with Algebra’s code. Ensuring it’s completely safe to continue using our partners https://t.co/jtx8vRJLch

— Algebra DEX Engine (@CryptoAlgebra) January 4, 2024

According to Officer’s Notes, the amount of lost assets amounted to 6.3 million USD, not 3.4 million USD as initially discovered.

Counted 6.3M in stolen funds!https://t.co/a8tfPXMQtT

— Officer’s Notes (@officer_cia) January 4, 2024

The incident continues to be investigated by security experts, as it involves a chain of decentralized protocols, showing how complex and difficult to trace.

Related: Orbit Chain Bridge was Hacked for 81.5 Million USD

Chart of GAMMA after being hacked

Gamma Strategies’ GAMMA token price has dropped nearly 40% since news of the hack spread.

4H chart of GAMMA/USDT pair on tradingview at 08:39 AM on January 4, 2024