DeFi protocol Gamma Strategies suffers an estimated $3.4 million exploit

Decentralized finance (DeFi) protocol Gamma Strategies suffered an exploit resulting in the loss of around $3.4 million, according to security analysts.

The protocol has taken immediate action to prevent further losses. The team has disabled deposits to all public DeFi vaults while ensuring that withdrawals remain active for users needing to access their funds.

"Our vaults will continue to be managed normally for now, but deposits are currently shut down until we identify and mitigate the problem," the team said . 

Security firms PeckShield and BlockSec both told The Block the incident resulted in estimated losses of $3.4 million, with the hacker taking over 1500 ether. BlockSec’s analysis points to a critical vulnerability in the protocol's "accounting mechanism."

“The root cause stems from the inconsistency between the accounting mechanisms for depositing and withdrawing used by Gamma Strategies, which results in a discrepancy between the liquidity and the shares,” BlockSec founder Yajin Zhou told The Block. “Exploiting this, the attacker could withdraw an excessive amount of tokens.”

Gamma Strategies is a decentralized asset management protocol built on Ethereum and other blockchains. It allows users to deposit funds into pools called “hypervisors” and earn a return on their investment through active liquidity management and market-making strategies.