As an emerging DEX and DeFi ecosystem, LeetSwap has been gaining traction in the cryptocurrency market, attracting users with its focus on security, speed, and user-friendliness. However, this sudden success drew attention to potential vulnerabilities in the liquidity pool.
LeetSwap: A Growing DEX on Base Chain
LeetSwap had been actively operating on the Base chain, largely influenced by the memecoin $BALD, which experienced a meteoric rise in value, garnering thousands of transactions. The Base ecosystem had witnessed a surge in the launch of new tokens, with $BALD amassing a staggering $55 million Total Value Locked (TVL) within just 24 hours of its introduction.
Hacker Targets LeetSwap
On the evening of July 31st, LeetSwap announced a temporary suspension of its operations due to security risks. The DEX identified potential compromises in its liquidity pools, raising alarms about a possible attack.
As our DEX is forked from Solidly, our factory had a security pause function.
We noticed that some pool liquidity might have been compromised and we temporarily stopped the trading to investigate.
— LeetSwap (@LeetSwap) August 1, 2023
Researchers have identified a vulnerability in the code of LeetSwap’s pools that allows users to withdraw all liquidity with ease, leading to potential exploits and security breaches.
It was easy:
– swap a bit of WETH for X tokens (should have fees)
– call _transferFeesSupportingTaxTokens(address, uint256) to move token to a Fees contract
– call sync()
– swap X tokens for all WETH from the poolDon't think that this function should be public
GG WP pic.twitter.com/a7vXvWf0HY
— Igor Igamberdiev (@FrankResearcher) August 1, 2023
According to Steven Zheng, Director of Research at The Block, a hacker successfully attacked LeetSwap, stealing approximately 340 ETH, worth around $630,000, from various trading pairs on the DEX.
Market Impact: Potential Rug Pulls on Base
In the wake of the platform’s announcement, the $LEET token price plummeted by 5.4%. Apart from the LeetSwap incident, other memecoin projects on Base have also faced suspicions of rug pulls. Notably, the $BALD project witnessed a sudden 90% drop in value when a significant amount of liquidity was withdrawn from its pool on LeetSwap. The value of memecoin $BALD to drop sharply from $0.09 to $0.01. As of now, $BALD is trading at around $0.006, indicating a significant 90% decline in value within 24 hours.
Conclusion
The recent events surrounding LeetSwap and other Base-based projects have highlighted potential weaknesses in the Base Chain’s security measures. Base Chain is still a relatively new platform, and it appears that its security protocols may need further refinement.
The crypto industry faced a challenging period in July 2023, with $303 million stolen from well-known DeFi protocols due to attacks. While the number of attacks decreased compared to the previous year, security continues to remain a critical concern for the industry.
Disclaimer: The information in this article is not investment advice from CryptoChill. Overall, cryptocurrencies always carry many financial risks. Therefore, do your own research before making any investment decisions based on this website’s information.
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