The layer-2-based scaling solution of Optimism has encountered a setback as a result of the platform’s market maker’s smart contract being exploited, which resulted in a loss of up to 20 million OP tokens in this regard.
The community of the venue was not made aware of this incident until recently, despite the fact that it happened on May 26. On June 5th, 1 million tokens worth roughly $1.3 million were traded. Today, an additional 1 million tokens worth roughly $730,000 were transferred to Vitalik Buterin’s Ethereum address via Optimism. Although inactive at the moment, the remaining tokens may at any time be traded or used to influence governance decisions.
The OP token, which functions as the local token on Optimism Layer-2, airdropped some of its supply to network users on June 1st. The L2 solutions significantly help in removing congestion on a layer-1-based blockchain like Ethereum.
The Optimism group elaborated on how the crypto market-making firm Wintermute expressed its intention to use the 20M OP tokens in its summary of the incidents released on Thursday. The group of Optimism sent the entire token amount after delivering 2 experimental transfers. However, Wintermute discovered that because the smart contract it used to receive the tokens was based on L1 and had not had an update made for its deployment on Optimism, it was unable to reach the tokens.
A malicious entity launched an attack and assumed control of the layer-2 smart contract due to a very technical oversight. Wintermute launched a recovery activity with the intention of deploying the L1-based multisig contract when the problem first came to their attention, but it was already too late. To execute a transfer under a multisig contract, the chief holders’ approval is required.
The community of Optimism received a message from Wintermute on June 9 in which it claimed sole responsibility for the incident. In order to lessen the impact on price volatility, the company stated that it would perform OP buybacks that would be equal in value to the ones that were exploited. The majority of responses from the public regarding this decision highly praised the venue for its transparency and for disclosing the issue in order to take responsibility for their own actions.