Kyber Network requests immediate withdrawal of funds, here’s why
- DeFi protocol Kyber Network announced on 17 April that there was a potential vulnerability in the exchange’s contracts.
- It immediately asked all the liquidity providers to withdraw their cash as quickly as feasible.
The developer of the Kyberswap Elastic decentralized crypto exchange, Kyber Network, announced on 17 April that there was a potential vulnerability in the exchange’s contracts. All liquidity providers have been instructed to withdraw their cash as quickly as feasible.
According to the developer, no funds were lost. The developer, however, recommended liquidity providers (LPs) withdraw their cash as a precaution.
Only Kyberswap Elastic money is in jeopardy. According to the researchers, the vulnerability does not exist in Kyberswap Classic smart contracts.
The team announced in a separate post that farming incentives were temporarily paused. This is supposed to continue until a fresh smart contract can be installed. All prizes earned previous to 18 April, 11:59 p.m. (GMT+7) were already distributed and were unaffected by this halt.
The developer also mentioned that it will soon provide an update to the community on when funds can be safely placed back into the protocol.
Investigation underway, KNC token drops and recovers
KyberSwap Elastic, according to its own documentation, is a decentralized exchange (DEX) that allows LPs to provide “concentrated liquidity.”
Rather than requiring them to offer liquidity at any price point, it lets them choose a price cap and floor for the tokens they deposit into the pool.
LPs no longer earn fees if the price falls below the floor or rises over the ceiling. They do, however, receive additional compensation if the price remains within the range they have established. In contrast, the DEX’s previous version, KyberSwap Classic, did not support concentrated liquidity.
In September 2022, the Kyberswap user interface was hacked, and an attacker made off with $265,000 in cryptocurrency, as a result.
The protocol acknowledged that investigations were still underway.
The protocol’s native token, KNC, dropped by 6% following the news. However, later on, its value recovered to the same point as before.