LeetSwap, the leading decentralized exchange by trading volume and liquidity on Base, an Ethereum Layer 2 solution from Coinbase, has paused trading on its platform due to possible exploitation of the platform's liquidity pools.
The decentralized exchange team said in a tweet this morning that some liquidity pools on the DEX “may have been compromised” and trading remains suspended while the issue is “investigated.”
The team said in a follow-up tweet that it was trying to “find a way to recover the locked liquidity.”
Since our DEX is derived from Solidly, our factory had a security pause feature.
We have identified that some pool liquidity may have been impacted and have temporarily paused trading to investigate.
— LeetSwap (@LeetSwap) August 1, 2023
The platform allows users to lock their liquidity provider tokens, essentially receiving tokens for providing liquidity to a DEX, in exchange for LEET token rewards.
A LeetSwap user wrote on his Discord that his locked liquidity in the Axelar Wrapped USDC (axlUSDC) and Ethereum (ETH) pool “disappeared” overnight.
The team added that withdrawals of assets that were not locked in the pools were open while trading remained suspended.
According to DeFiLlama data, LeetSwap had $41.2 million in deposits as of Monday when the meme coin hype began on Base.
A meme coin is a category of cryptocurrency tokens that have no particular use but gain popularity and value primarily due to their association with an internet meme, joke, or viral content.
Its liquidity has since plummeted following a massive rug pull scam involving BALD tokens and the trading halt this morning. Currently, the DEX holds $7.17 million worth of deposits.
A rug pull is a developer scam in which a company that created a decentralized application or token suddenly shuts down or disappears, taking investor assets with it.
The story goes on
Meme coin rush on base
Coinbase's Layer 2 platform opened the network to developers on July 13 after launching numerous meme coins.
According to DEX Screener data, there are currently 100 meme coins listed on LeetSwap.
On Sunday, LeetSwap recorded $200 million in meme coin trading volume, with the BALD token accounting for more than half of the trading interest.
“Flatcoin” developers respond to Coinbase’s call for Layer 2 network deployment
The meme token may refer to Coinbase CEO Brian Armstrong's shaved head. The price of BALD rose by more than 3000% within a day of its launch on July 30th.
However, at its highest market cap of around $28.1 million, the token's developer on LeetSwap withdrew $25.6 million worth of liquidity, causing the token to plunge by more than 92% in minutes.
Blockchain experts suspect that FTX's infamous founder Sam Bankam-Fried was involved in the BALD action.
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