Kyber Network’s DeFi project KyberSwap admits that users encountered problems during transactions, resulting in large losses.
On the morning of March 11, Kyber Network received information that a KyberSwap user conducted a swap of 2 million USD tokens, but in the end only collected 0.05 USDT causing a stir in the DeFi community.
Specifically, a DeFi user attempted to swap the 3CRV token, which is the token that provides liquidity to Curve’s 3pool. However, usually, people will only convert 3CRV back to stablecoin right on Curve, not trade it on the DEX.
With USDC insolvency fears rampant, users are fleeing to safety in other stables. Not all of them are going to make it there in one piece, however.
Here’s how one unlucky user paid $2,080,468.85 to receive $0.05 of USDT. pic.twitter.com/R8YdudWfsV
— BowTiedPickle.eth | Solidity Shipper (@BowTiedPickle) March 11, 2023
Therefore, KyberSwap had problems finding the swap location requested by the user, returning the result of a 3CRV/USDC pool on Uniswap v2 with extremely poor liquidity because only 2 USDC was available and did not active for 251 days.
However, DeFi users were probably panicking after the continuous USDC depeg period on March 11th, so they still agreed to swap, even though KyberSwap’s interface showed that the swap resulted in receiving a much lower amount of stablecoins compared to other users. with principal.
After the transaction was made, an MEV bot detected that the above pool was unbalanced and deposited 1.41 USDC into the pool and withdrew 2 million USD of 3CRV tokens. To ensure the fastest possible transaction, MEV attaches USDC deposit to the pool with a fee of up to 23.7 ETH (approximately $39,000).
The problem with transactions comes from both sides, that is, users when choosing an unusual way to convert assets without setting up slippage precautions, as well as KyberSwap when navigating transactions to a “pool” die”.
KyberSwap on the afternoon of March 11 confirmed the incident. The project claims to have in fact offered the user a swap option at a reasonable rate, and this person approved.
However, due to strong volatility in the cryptocurrency market on the morning of March 11, KyberSwap’s router function was unable to estimate the gas fee required for a viable swap. After a while of searching, it could only estimate the gas for Uniswap v2 pool through 0x, and recommend it back to the user.
4/12
Since the market was undergoing a volatile period, all routes failed at estimating gas. The rate strongly fluctuated successful & only 0x’s route was but with a very poor rate. pic.twitter.com/wjpoFVRNqM— Kyber Network (@KyberNetwork) March 11, 2023
Users, when shown new information, still choose swap despite the huge exchange rate difference, resulting in a small amount of USDT in return. KyberSwap tried to simulate the conditions that formed the above trade, with almost the same results.
7/12
Our team tried to reproduce this situation with a huge difference between amountIn and amountOut in USD.
Here is what KyberSwap UI shows from beginning to end. pic.twitter.com/oAhRTpm1BL— Kyber Network (@KyberNetwork) March 11, 2023
Kyber admits their swap interface needs to be tweaked to show swap estimates more prominently. At the same time, the project considers installing an additional function that forces users to set up a transaction from scratch if the updated swap price is lower than the information displayed previously.
The project quickly displayed a warning about exchange rate changes and required users to take the extra step of accepting it before swapping.
/13
We have made an immediate update to our Confirm Swap UI, live on KyberSwap, & you can see below.Anytime the new price is worse than the initial price quoted, we will display a warning to the user, and ask the user to accept the new price before proceeding with the swap pic.twitter.com/VnpdNYIpde
— Kyber Network (@KyberNetwork) March 11, 2023
KyberSwap is contacting the affected user, the developer of the MEV bot, and the user of the bot to withdraw funds to reach an agreement between the parties.
Synthetic Kyptos
