LeetSwap DEX suspends base trading due to possible hack

in summary

• LeetSwap, the main decentralized exchange on Base, has shut down operations due to possible exploitation of liquidity pools.
• Some liquidity pools could be at risk. The team is investigating the issue to restore the blocked liquidity.
• LeetSwap’s liquidity plummeted following a scam attempt involving the BALD token, which attracted more than 50% of trading interest on the platform.

LeetSwap, the leading decentralized exchange by trading volume and liquidity on Base, a layer 2 Ethereum solution from Coinbase, has halted trading on its platform due to possible depletion of the platform’s liquidity pools.

The decentralized exchange team said in a tweet this morning that some liquidity pools on DEX “may have been compromised” and that trading will remain suspended while the issue is “investigated”.

They added in a tweet that they are trying to “find a way to recover the blocked liquidity.”

Because our DEX is derived from Solidly, our factory had a safety pause feature.

We have determined that some pool liquidity may have been compromised and have temporarily suspended trading to investigate this.

— LeetSwap (@LeetSwap) August 1, 2023

The platform allows users to lock their liquidity provider tokens, which are basically receipt tokens for providing liquidity to a DEX, in exchange for rewards in the form of LEET tokens.

A LeetSwap user wrote on his Discord that his liquidity locked in the Axelar Wrapped USDC (axlUSDC) and Ethereum (ETH) pool “disappeared” overnight.

The team added that withdrawals of assets not locked in the pools are open while trading remains suspended.

According to DeFiLlama data, LeetSwap had $41.2 million in deposits as of Monday when the meme coin started hype on Base.

A meme coin is a category of cryptocurrency token that has no particular utility but gains popularity and value primarily due to its association with an internet meme, joke, or viral content.

Its liquidity has plummeted following a huge rug-pull scam related to the BALD token and its trading pause earlier this morning. Currently, the DEX has $7.17 million worth of deposits.

A rug pull is a developer scam in which a company that created a decentralized app or token suddenly shuts down or disappears, taking investors’ fortunes with them.

Basic Meme Coin Rush

Coinbase’s Layer 2 platform opened the network to developers on July 13 after numerous meme coins were released.

According to data from DEX Screener, there are currently 100 meme coins listed on LeetSwap.

On Sunday, LeetSwap saw $200 million in trading volume for meme coins, with the BALD token accounting for more than half of the trading interest.

The token meme may refer to Coinbase CEO Brian Armstrong’s shaved head. BALD’s price surged more than 3,000% within a day of its launch on July 30th.

However, at its peak market cap of around $28.1 million, the token’s developer on LeetSwap withdrew $25.6 million in liquidity, causing the token to drop more than 92% in a matter of minutes.

Blockchain researchers suspect involvement of the notorious FTX founder Sam Bankam-Fried in the BALD carpet train.

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Source: decrypt.co

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