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GMX finalizes $44M payout to GLP holders affected by V1 exploit
GMX announced the completion of its roughly $44 million compensation plan for GLP liquidity providers on Arbitrum who were impacted by a July V1 vulnerability. The protocol confirmed the final distribution round on X (Twitter) on Aug. 13, fully reimbursing affected wallets and introducing incentives designed to encourage holders to retain the distributed assets.
Exploit overview and immediate response
The incident, detected on July 9, exploited a re-entrancy flaw in the GMX V1 GLP pool. An attacker manipulated short average prices for Bitcoin (BTC), extracting approximately $42 million in assets. GMX reacted quickly: GLP trading, minting, and redemption were paused on both Arbitrum and Avalanche while the team coordinated remediation efforts.
Recovery actions and white-hat return
Following negotiations, about $37.5 million was returned under a white-hat bounty arrangement, with the attacker retaining roughly $5 million. The GMX community approved a recovery plan via a Snapshot vote that issued GLV (GMX Liquidity Vault) tokens to eligible GLP holders. These GLV tokens mirror GLP’s pre-exploit composition — roughly 25% Wrapped Bitcoin (WBTC), 25% Ethereum (ETH), and 50% stablecoins.
Incentives, treasury support, and supply adjustments
To stabilize the recovery, the GMX DAO allocated $500,000 in retention incentives for holders who keep GLV for three months and used treasury funds to cover a $2 million shortfall. GLP held by the white-hat, representing about 29% of supply, was burned to help restore proportional value across remaining holders.
GMX V2 remains unaffected; DeFi integrations under review
GMX V2 was not impacted by the V1 exploit and has continued to see rising trading volumes and improving liquidity since the incident. The DAO is coordinating bespoke recovery solutions for decentralized finance (DeFi) protocols that integrated GLP, and GLP redemptions are expected to resume in roughly 10 days.
Market impact and outlook
The exploit caused GMX token prices to tumble as much as 28% before a partial rebound. Total Value Locked (TVL) briefly fell from $480 million to $409 million but has since recovered strongly to over $600 million at press time. With V1 paused and slated for eventual sunset, GMX’s strategic focus is shifting to its V2 infrastructure to support long-term growth and security.
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