Jimbos Protocol exploited for $7.5 million three days after V2 launch

Crypto project Jimbos Protocol was exploited for 4,090 ETH ($7.5 million) just three days after its version 2 was launched.

The hack was enabled by the protocol's lack of control over slippage for the tokens under its control, according to crypto analysts PeckShield. The exploiter made use of a $5.9 million flash loan — where tokens are borrowed and instantly repaid — to carry out the attack.

"We are aware of the exploit regarding our protocol and are actively in contact with law enforcement and security professionals. We will release further information when possible," the protocol said on Twitter.

The Arbitrum-based Jimbos Protocol is an attempt to make a token with a semi-stable floor price, that's backed by an amount of assets. It attempts to take some elements of the Olympus DAO project — which rose quickly in price before eventually collapsing — but with a few changes hoped to make it more sustainable. The core idea is to use the project's own liquidity to support its price, in combination with taxes and incentives.

The project initially launched on May 16 but shortly after the launch, a smart contract bug stopped the protocol from working as expected. Users were told to not interact with version 1 and wait for version 2. Following today's exploit of version 2, the token's price has collapsed from $0.24 to $0, according to decentralized exchange TraderJoe.

On the project's website, it notes that "these mechanisms are experimental, the contracts are unaudited, and that any amount of money you put into this protocol can be lost due to unforseen circumstances at any time."

On May 25, popular crypto investor DCF God said he had bought some jimbo tokens, before realising it lacked the feature he had bought them for. Today he noted, "Oh and now I’m rugged."

Updated current price of jimbo token.