Kyber Network, developer of the Kyberswap Elastic decentralized cryptocurrency exchange, announced on April 17 that there are potential vulnerabilities in the exchange's contracts. It has advised all liquidity providers to withdraw funds as soon as possible. it has advised liquidity providers (LPs) to withdraw funds as a precautionary measure. Only the Kyberswap Elastic Fund is at risk. Kyberswap Classic smart contracts do not contain the vulnerability, the team said.
In a separate message, the team stated that farming rewards have been suspended until the new smart contract can be deployed. All rewards earned before 11pm (GMT+7) on April 18, 2023 have been issued and are not affected by this suspension.
The developer said it will update the community soon and explain when it is safe to deposit funds back into the protocol. According to its official documentation, KyberSwap Elastic is a decentralized exchange (DEX) that allows LPs to provide “centralized liquidity.” It does not require them to provide liquidity for any price point, but instead allows them to determine price ceilings and price floors for the tokens they deposit into the pool.
If the price is below the floor or above the ceiling, LPs will no longer receive fees. However, if the price stays within the range they set, they receive a higher fee. This is in stark contrast to the DEX's predecessor, KyberSwap Classic, which did not allow centralized liquidity. Kyberswap's user interface was hacked in September, allowing attackers to get away with $265,000 worth of cryptocurrency.
