GMX Completes $44M Compensation Plan for GLP Holders Affected by V1 Exploit

GMX has successfully finalized its compensation plan, distributing approximately $44 million to holders of GMX Liquidity Provider (GLP) tokens on Arbitrum who were impacted by a vulnerability in V1.

Key Takeaways

GMX completes a $44 million payout plan to GLP holders affected by the V1 exploit.
The exploit revealed a re-entrancy flaw that allowed an attacker to drain around $42 million in assets.
Affected GLP holders can now claim their compensation through the GMX decentralized application (dApp).
The GMX DAO provided incentives for GLP holders and covered a financial shortfall from its treasury.
GMX V2 continues to perform well, with increasing volumes and liquidity.

GMX finalizes $44M payout to GLP holders affected by V1 exploit

Main Content

GMX has wrapped up its compensation plan, which amounts to roughly $44 million for GMX Liquidity Provider holders on Arbitrum who were affected by a vulnerability in V1 that was disclosed in July.

This announcement was made on X by GMX on August 13, following the completion of the platform's final distribution round. All eligible wallets have been fully reimbursed, and incentives were offered to encourage the retention of distributed funds.

The exploit occurred on July 9, when an attacker exploited a re-entrancy vulnerability in the GMX V1 GLP pool. This flaw allowed the perpetrator to manipulate the short average prices for Bitcoin and drain close to $42 million in assets. In response, GMX temporarily suspended GLP trading, minting, and redemption on Arbitrum and Avalanche, ultimately negotiating the return of approximately $37.5 million through a white-hat bounty arrangement. The attacker retained about $5 million.

Eligible wallets can now claim their compensation through the GMX decentralized application (dApp). The comprehensive distribution plan was approved through a community vote on Snapshot and involved distributing GMX Liquidity Vault (GLV) tokens to GLP holders. The structure of these vaults mirrors GLP's pre-exploit composition, consisting of around 25% Wrapped Bitcoin, 25% Ethereum, and 50% stablecoins.

To further support these holders, the GMX DAO allocated $500,000 in retention incentives for those who maintained their GLV for three months and used its treasury to cover a $2 million financial shortfall. Notably, 29% of GLP held by the white-hat was burned to restore proportional value.

Despite the exploit, GMX V2—unaffected by the incident—has seen a consistent increase in trading volumes and liquidity. The DAO is currently exploring customized recovery solutions for decentralized finance protocols that integrated GLP, with GLP redemptions anticipated to resume in about ten days.

The exploit also led to a drop in GMX’s token price by as much as 28% before it started recovering. The total value locked in GMX fell from $480 million to $409 million but has surged back to over $600 million at the time of this report. With V1 operations paused and set to be phased out, GMX is shifting its focus entirely toward enhancing its V2 infrastructure.