Jimbos Protocol using Arbitrum attempts comeback after $7M hack
The developers of the Jimbos Protocol based on Arbitrum are currently evaluating the best course of action after their version 2 (V2) was exploited for $7.5 million over the weekend.
Jimbos stated that they are working with security researchers to recover the lost funds, the same researchers who have previously helped Euler Finance recover over $200 million. They also mentioned that if the attacker does not return the funds by 4 P.M. UTC on Monday, they will contact law enforcement.
The lack of slippage control in the main contract allowed the attackers, who have not been identified yet, to take out a flash loan of $5.9 million, manipulate the prices of JIMBO, and take the treasury funds. Jimbos lost 4,090 ether (ETH) late on Saturday.
The protocol had plans to issue a semi-stable token backed by a basket of crypto tokens, which attracted traders to the project as similar projects have seen success in the past.
Flash loans are commonly used by attackers to gain funds for exploiting decentralized finance (DeFi) systems. These loans allow traders to borrow unsecured funds from lenders using smart contracts instead of third parties. These loans do not require collateral as the contract only considers the transaction complete when the borrower repays the lender. If the borrower defaults on a flash loan, the smart contract cancels the transaction, and the money is returned to the lender.
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Meanwhile, the JIMBO token was trading at nearly 18 cents on Monday and slightly recovered in Asian morning hours as the developers shared their plans to protect the protocol.
Edited by Sam Reynolds.