Optimism Foundation Wintermute’s Mistake
A statement has been released by the Optimism Foundation verifying that 20M of OP tokens, that were to be delivered to a liquidity provisioning collaborator, have gone to some wrong address. The OP token’s price plummeted from $1.12 (witnessed on 8th June) to only $0.70 following the news spread. In the statement, it was noted that the Optimism Foundation collaborated with Wintermute to have services regarding liquidity provision. In this respect, the statement added, Optimism Foundation specified a short-time grant of up to 20M worth of OP tokens for Wintermute from its Partner Fund.
The statement further mentioned that the address was given by Wintermute to obtain the borrowed tokens. A couple of separate transfers were sent by the Optimism Foundation and confirmation was provided for both of the respective transactions by Wintermute in advance of them being sent. Unluckily, later on, Wintermute came to know that the sent tokens cannot be accessed by them as the address was of a multisig based on Ethereum (ETH) Layer 1 and which has not been deployed by them to Optimism Layer 2 up till now. According to sources, Wintermute hadn’t deployed Gnosis Safe to their Optimism Wallet address.
The product for the support of which Optimism endeavored to have the liquidity services of Wintermute was not being supported because of the wrong placement of the tokens. Even though it is asserted by Wintermute to be the top creator of the algorithmic market in the case of digital assets throughout the globe, a very fundamental mistake within the crypto market has been done by it, particularly keeping in view its position as a maker of the algorithmic market. On this happening, Wintermute stressed they are determined to purchase back the lost tokens. Additionally, they will observe the address holding the lost tokens to purchase it.
Recovery Procedure
Optimism clarified that some efforts were made by Wintermute to get the issue resolved without any requirement of repurchasing the tokens because they started a recovery activity with the target to install the multisig contract of L1 into the very address on L2, nevertheless to their disappointment, a hacker turned out to be successful in doing so with diverse initialization characteristics before them, occupying 20m OP. Nonetheless, the entity responsible for making this move has certainly done an unethical activity by manipulating the vulnerability of Wintermute.
Wintermute Response
A response has been written by Wintermute to the user base of Optimism through its governance platform. In the response, the group elaborated that a grave mistake has been committed on their behalf. The post brought to the front that this did not count to be a shrewd thing to do.
Nonetheless, it seems that 30th May was the day when this occurred, only 30 days ahead of Optimism’s mainnet launch. After that, a further 20M OP was taken by Wintermute in its possession by giving $50M worth in USDC in terms of collateral. Nevertheless, a 3rd party (hacker) quickly retrieved the funds. As per Wintermute, a complex method was adopted by the 3rd party to get into the funds via a deposit on Tornado Cash.
