Kyber Network, a decentralized finance (DeFi) protocol, has urged the liquidity providers (LPs) on its KyberSwap Elastic decentralized exchange to withdraw their funds due to a possible vulnerability in the exchange’s contract.
Kyber Network has assured the community via a tweet on April 17 that no funds have been compromised, but to err on the side of caution; it has recommended that liquidity providers withdraw their funds.
The tweet read:
“Attention KyberSwap Elastic Liquidity Providers: We have identified a potential vulnerability, and as a precaution we strongly advise all Liquidity Providers to withdraw your funds on Elastic as soon as possible.”
The risk is only limited to KyberSwap Elastic funds, while KyberSwap Classic smart contracts are unaffected by the vulnerability, the team explained.
TVL drops over 80%, KNC drops 4%
Defillama’s data reveals a sharp decline in the total value locked (TVL) in Kyber Network’s Elastic product, which plummeted to $17.71 million from $108 million on April 16.
Furthermore, Coinmarketcap data shows that the value of Kyber Network’s native token, KNC, has decreased by 4% following the announcement.
The Kyber Network team announced in a separate message that farming rewards have been put on hold until a new smart contract is implemented. However, all previously earned rewards before April 18, 11 pm (GMT+7) have already been distributed and are not impacted by the temporary suspension.
Security risks in DeFi space
The Kyber Network has been hit by security issues before. In September 2022, it was hit by a front-end exploit that resulted in a loss of $265,000. Additionally, just last month, a user of Kyber Swap only received 0.05 USDT after exchanging 2 million USDC due to an error in routing.
As the DeFi space continues to expand, the number of vulnerabilities and exploits also seem to be on the rise. This latest announcement from Kyber Network is a reminder of the potential security risks investors face, especially in light of recent high-profile hacks like the $196 million Euler Finance hack, the $23 million Bitrue exchange hack, and the Yearn Finance hack.
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