GMX Delivers $44M Redemption to GLP Holders After V1 Exploit—DeFi Accountability in Action
DeFi just got a $44 million lesson in accountability. GMX—the perpetual trading protocol—has finalized payouts to GLP liquidity providers burned by its V1 exploit. No vague promises, no 'community rebuilding' platitudes—just hard crypto hitting wallets.
Who said decentralized finance can't handle its messes? While TradFi lawyers would still be billing hours, GMX's smart contracts auto-processed restitution like a self-auditing vault. Take notes, Wall Street.
Cynical footnote: At least this exploit didn't require a taxpayer bailout. Progress?
Distribution finalizes recovery from July exploit
The exploit, detected on July 9, targeted a re-entrancy flaw in GMX V1’s GLP pool. This enabled an attacker to manipulate short average prices for Bitcoin (BTC) and drain roughly $42 million in assets.
GMX halted GLP trading, minting, and redemption on Arbitrum (ARB) and Avalanche (AVAX), later negotiating the return of ~$37.5 million under a white-hat bounty arrangement. The attacker retained about $5 million.
GMX has successfully completed its ~$44M Distribution Plan for $GLP holders on Arbitrum affected by the recently disclosed V1 vulnerability.
Eligible wallets can now claim via the GMX dApp.
🧵 Read the details below:
1/7 pic.twitter.com/wCMUTec6Lo
The completed plan, approved via a community Snapshot vote, distributed GLV, or GMX Liquidity Vault tokens, to eligible GLP holders. Similar to GLP’s pre-exploit composition, these vaults contain approximately 25% Wrapped Bitcoin (WBTC), 25% Ethereum (ETH), and 50% stablecoins.
The GMX DAO provided $500,000 in retention incentives to holders who held GLV for three months, while also using its treasury to cover a $2 million shortfall. GLP held by the white-hat, representing 29% of the supply, was burned to restore proportional value.
GMX V2 continues unaffected
GMX V2, which was not impacted by the incident, has maintained rising volumes and liquidity since the exploit. The DAO is working on tailored recovery solutions for decentralized finance protocols that integrated GLP, with GLP redemptions expected to resume in about 10 days.
The exploit caused GMX’s token price to fall by up to 28% before partially recovering. Total value locked dropped from $480 million to $409 million, but has recovered sharply to over $600 million as of press time. With V1 paused and set for eventual sunset, GMX’s focus is shifting entirely to its V2 infrastructure.
