Jimbos Protocol is the most recent protocol to have an attack resulting in a substantial loss of cash, adding to the rising number of decentralized finance (DeFi) protocol hacks in the cryptocurrency sector. The Arbitrum system’s liquidity mechanism, Jimbos mechanism, was hacked on the morning of May 28 according to blockchain security company PeckShield. 4,000 Ether, which at the time was worth around $7.5 million, were lost in the attack.
In particular, the attacker profited from the absence of slippage control on liquidity conversions. Due to the fact that the price range in which the protocol’s liquidity is invested does not have to be equal, there is a gap that allows for the reversal of swap orders by attackers for their own benefit.
Despite being only a few days old, Jimbos Protocol sought to address token price volatility and liquidity with a novel testing strategy. The mechanism of the protocol, however, was not sufficiently developed, which resulted in a logical flaw that favored attackers. The price of the underlying token, Jimbo (JIMBO), has consequently fallen by 40%.
PeckShield’s research indicates that the attackers took 4,090 ETH from the Arbitrum network. They then transferred about 4,048 ETH from the Ethereum network through the Stargate bridge and the Celer Network. It is not unusual for DeFi protocols to be hacked. The community is still exposed to multiple exploits even if reports show a dramatic decrease in attacks compared to past years.
The DeFi ecosystem has the ongoing issue of guarding against potential flaws and illegal access despite efforts to improve security mechanisms. A recent flash loan attack on the 0VIX protocol is one illustration, which caused a large loss of around $2 million.
The recent hijacking of Tornado Cash, a well-known privacy-focused protocol, is another important incident. considerable financial losses resulted from unidentified attackers successfully compromising the system and taking considerable amounts of Tornado Cash (TORN) tokens.