Levana, a perpetual swap protocol on the Osmosis blockchain, fell victim to an exploit, resulting in a loss of over $1.1 million from its liquidity pool.
According to an after-action report provided by the team, the exploit occurred over a period of 13 days. Between December 13 and December 26, the attackers drained 10% of Levana’s liquidity pool.
Attackers used a congestion attack on the Osmosis chain to disrupt the ability of Levana users to interact with the marketplace. This was further exacerbated by a bug in Osmosis’ fee market code and a “pricing staleness” in Levana’s Pyth oracle integration, which allowed attackers to manipulate prices and deplete the pool.
“A bug in the Osmosis fee market code means that the gas prices provided during crowded periods are generally insufficient to make trades or perform ongoing bot maintenance activities,” Levana wrote.
The team said there were no vulnerabilities because the Pyth oracle “worked exactly as expected.”
Levana is working on a fix that will be deployed in code upgrades for the chains on which Levana is available: Osmosis, Sei, and Injective.
It added that despite the exploit, existing trading positions and profits were not affected. However, new positions and modifications to existing positions have been temporarily suspended until the update scheduled for next week.
Levana plans to compensate affected liquidity providers through airdrops and distribution of protocol fees collected during the attack period.
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