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GMX, the decentralized exchange (DEX), made headlines in 2022 when it awarded Collider Research a substantial $1 million bug bounty. This generous payout was a testament to the critical bug Collider Research uncovered in GMX’s smart contracts. The bug directly and adversely impacted how the protocol tracked outstanding debt within the system. However, GMX has been tight-lipped about how this bug was rectified and when the patch was implemented. The bug had significant repercussions, particularly for GMX v1 liquidity providers (LPs). It disrupted the accurate calculation of quotes related to the “fair value of tokens.” More specifically, it wreaked havoc on the Global Liquidity Pool (GLP), causing it to deviate from its intended fair value. Understanding the gravity of this situation requires a glimpse into GMX ’s inner workings. The exchange supports leveraged trading with up to 50X leverage. The system meticulously tracks the debt incurred by traders and the r...

Smart contracts should be viewed as “proof-of-concept” rather than as critical for universal adoption. That may mean exploring alternatives. Smart contracts have reshaped the possibilities of what blockchain and crypto can achieve, and we can all acknowledge that. That doesn’t mean they’re the be-all-end-all solution to widespread adoption. Being overzealous about any kind of innovation can also contribute to its stalling, or even failure if other factors don’t align. The mentality of assuming new technology is perfect and wondering why everyone hasn’t caught up to its genius is outdated. Not only does it create an adversarial relationship when inevitabilities, such as regulation, arise, but it also diminishes the motivation to improve on new applications to maximize their value. Smart contracts and companies building their products around their implementation are now nearing this impasse. So, what can be done to close these gaps and potentially set the stage for an alternative? The g...