Cetus Protocol on Sui Network Hacked and Prices Tank: Everything You Need To Know

Cetus Protocol, a leading DEX on the Sui Network, has been hacked, losing at least $200 million. CETUS, SUI, and Sui network meme coins crashed as a result. Here’s everything you need to know about the Cetus Protocol hack.

There’s always a first for everything. Ethereum faced a hard fork barely a year after launching. While not a hack, the damage and controversy impacted Ethereum, causing splits in blockchain ideology.

Cetus Protocol Hacked

Launched in May 2023, the Sui Network enjoyed a smooth run until today, when the Cetus Protocol fell victim to hackers.

https://twitter.com/lookonchain/status/1925520316044046809?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow

The protocol lost between $220 and $230 million in an incident that sent shockwaves through the crypto and DeFi communities.

Hacks not only result in the loss of valuables, data, and funds but also have severe side effects, sometimes even forcing sell-offs in some of the best cryptos to buy.

The Cetus Protocol hack triggered a sell-off, causing CETUS to plummet by over 40% and trail some of the best Solana meme coins.

(CETUSUSDT)

What is Cetus Protocol?

So, what happened? The Cetus Protocol is a decentralized exchange (DEX) on the Sui Network.

It utilizes the concentrated liquidity market maker (CLMM) model pioneered by Uniswap and incorporates features from Trader Joe’s CLMM design.

Beyond token swapping, Cetus is one of the largest liquidity providers on Sui.

Within the Sui ecosystem, users primarily use Cetus to swap SUI/USDC, but as a DEX, it supports hundreds of liquidity pools for various tokens minted on the network.

Over time, Cetus became a hub for trading meme coins on the scalable platform.

What Happened?

As a core DEX on Sui, Cetus was (as expected) a prime target for hackers.

On May 22, they exploited multiple liquidity pools, draining $11 million from the SUI/USDC pool and wiping out funds from various meme coin pools, causing token prices to crash.

(Source)

The Lombard Staked BTC (LBTC) pool was among the hardest hit, nearly wiped out entirely.

How did this Cetus Protocol hack happen?

Analysts report that hackers gained control of all SUI-denominated liquidity pools.

They then minted or deposited near-zero-value spoof tokens to manipulate CLMM price curves and reserves, extracting real assets without depositing equivalent value.

https://twitter.com/d0rsky/status/1925513235987394721?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow

This was possible due to a rounding bug in the liquidity pool logic.

https://twitter.com/SuiCorner/status/1925562114925584606?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow

Although the Oracle was expected to detect this, Cetus attributed the exploit to a pricing Oracle malfunction.

By then, hackers had stolen tokens worth over $200 million.

Approximately $60 million in USDC was quickly bridged to Ethereum and swapped for ETH within an hour.

But there is good news: Around $160 million has reportedly been frozen and will be returned to Cetus pools.

https://twitter.com/CetusProtocol/status/1925567348586815622?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow

Damage Control Underway at SUI

As token prices plummeted, Cetus Protocol froze its contracts to halt further losses.

It also promised a thorough investigation.

Sui Network developers have pledged support.

https://twitter.com/SuiNetwork/status/1925572334054002774?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow

Amid the chaos, Changpeng Zhao, the Binance co-founder, said they would “do everything” to assist Sui, noting that the hack is “not a pleasant situation.”

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