NO Hacker YES Portal Recently, a major DeFi platform @GMX_IO was hacked on the @arbitrum network, resulting in the theft of around $42 million in assets! 😵 @PortaltoBitcoin gives a great breakdown of how this massive exploit was pulled off. To beat the enemy, you must first understand them! Let’s take a quick look! 1️⃣ How Did the Hack Happen? GMX V1 has a liquidity pool called GLP, which held assets like ETH, BTC, and USDC deposited by users. The hacker used the following method: ➡️ Re-entrancy attack This is a technique where a smart contract function is repeatedly called before the balance gets updated, allowing multiple operations to sneak in undetected. Using this, the attacker minted a huge amount of fake GLP tokens (basically like printing unlimited counterfeit vouchers). These fake tokens were then swapped for real assets (ETH, BTC, USDC) and withdrawn. 🫣 Finally, the stolen funds were bridged out to other networks like Ethereum mainnet. Here is easy to say: They printed fake receipts, exchanged them for real money, and vanished. 2️⃣ Why Was This Attack Successful? GMX V1 was built using a typical DeFi architecture: Shared liquidity pool: All user assets are stored in a single contract. Mint/Burn LP tokens: Used to track liquidity provisioning. Complex on-chain logic: Handles balances, swaps, liquidation, and more within the same contract. This tightly coupled design leaves it vulnerable to re-entrancy attacks where a hacker can sneak in repeated calls before the system updates balances. Even though GMX went through multiple audits, design-level risks like pooled funds + complex logic + re-entrancy vulnerability still remained. So, while audits can reduce bugs, they can’t eliminate structural weaknesses and that’s what led to this disaster. 🥲 3️⃣ How Could This Have Been Prevented? The answer lies in what @PortaltoBitcoin is building: Atomic Swaps. Here’s how Atomic Swaps differ: ❌ No liquidity pools. ✅ Assets stay in your wallet. ✅ The swap only executes if all conditions are met. ✅ If anything fails, your funds automatically return. ✅ No contract needs to hold funds or update state. With this setup: 1⃣ There’s no vault to rob. 2⃣ No fake tokens can be minted. 3⃣ And re-entrancy attacks become impossible. It’s basically the ultimate shield against hackers! With DeFi hacks on the rise, many projects are now moving toward this kind of architecture: Atomic swaps, self-custody of user assets, and re-entrancy-proof designs. That’s why the future is looking so bright for @PortaltoBitcoin.