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Optimism: Protocol Kokomo Finance initiates exit scam, all you need to know

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DeFi Hit by Another Blow: Kokomo Exit Scam on Optimism Network Results in $4 Million Losses
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  • Kokomo Finance initiated an exit scam, causing $4 million in losses.
  • Optimism network’s TVL showed a slight downtrend, possibly impacted by the exit scam.

Not long after Euler Finance’s hack, the DeFi community was hit with another blow when Kokomo, a protocol on the Optimism [OP] network, initiated what appears to be an exit scam.

Read Optimism’s [OP] Price Prediction 2023-24

All about the Kokomo exit scam

On 26 March, Twitter account CertiK Alert notified the community that Kokomo Finance had perpetrated an exit scam. This update was a follow-up to the initial post by CertiK, which highlighted a price slippage in the protocol. The alleged exit scam is said to have resulted in approximately $4 million in losses.

Kokomo Finance, a platform launched on the Optimism network on 25 March, offered users the ability to trade, borrow, and lend various digital assets such as Wrapped Bitcoin [wBTC], Ether [ETH], Tether [USDT], USD Coin [USDC], and Dai [DAI]. However, just a day later, on March 26, Kokomo developers executed an attack on the contract cBTC from the main KOKO address, which was the native token of Kokomo. 

They adjusted the reward speed, paused the borrow feature, and created a malicious contract to interact with the rest of the protocol, as reported by CertiK. A different developer address was then utilized to approve a transfer of over 7,000 Sonne Wrapped Bitcoin. These tokens were then utilized to swap all liquidity supplied by users into Kokomo.

Is your portfolio green? Check out the Optimism Profit Calculator

Optimism’s TVL dipped slightly

DefiLlama’s data on 27 March showed a a drop of 1.17% in the Total Value Locked on Optimism (TVL). However, it was uncertain whether the exit scam played a role. The decrease marked a change in direction from the previous stable trend that the network had been experiencing.

Optimism TVL

Source: DefiLlama

OP on a daily timeframe

As of this writing, Optimism (OP) was not exhibiting its most favorable trend on a daily timeframe. The token was trading at a loss of nearly 4% and hovered around the $2.17 mark in the trading period observed. Additionally, the token’s value had been on a downward trend, with the Relative Strength Index indicating a bearish trend.

OP/USD daily timeframe

Source: TradingView

 

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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