Panic spread across crypto trading communities on May 22 as decentralized liquidity protocol Cetus suffered an alarming incident that appeared to drain over $11 million in SUI tokens from its liquidity pools. In response, the Cetus team moved quickly to pause smart contracts tied to the SUI ecosystem and issued a preliminary statement citing an oracle bug not a hack as the likely cause.
Liquidity Vanishes as Pools Hit Zero
At approximately 11:00 UTC, traders noticed troubling activity as the token supply in Cetus’s liquidity pools plummeted to zero. Several key tokens hosted on the protocol, including AXOL, SUIRI, and HIPPO, crashed in value, plunging by 75% to 92% based on circulating screenshots and user reports. The total estimated value of the drained liquidity surpassed $11 million, causing widespread concern.
In a pinned message shared on the platform’s Discord server, an admin named Figure.Cetus reassured users that the team was actively investigating the issue and attributed the problem to an oracle malfunction, not a malicious exploit. The admin urged community members to remain calm, promising that an official update would follow soon.
Smart Contracts Paused, Platform Goes Dormant
In an emergency measure, Cetus halted all smart contracts tied to the SUI ecosystem, effectively freezing operations on its trading platform. Users visiting the platform’s app now see empty liquidity pool data, with no trading pair metrics displayed an unusual and disquieting sight for regular users.
The team issued a brief public statement via Twitter:
“A further investigation statement will be made soon. We are grateful for your patience.”
Oracle Bug at the Center
Early indicators point to a malfunction within the oracle system powering Cetus’s price feeds. In decentralized finance, oracles serve a critical role by feeding external market data to on-chain smart contracts. Any disruption or misfeed in this process can lead to mispriced assets, inaccurate trades, or, in worst-case scenarios, protocol-wide malfunctions like the one Cetus appears to be experiencing.
While some community members initially feared a full-blown hack, the claim of an oracle bug, if confirmed, may indicate a technical failure rather than a security breach, though the consequences remain significant.
Market Impact: SUI Defies the Panic
Interestingly, the broader SUI token (SUI) market has shown resilience despite the Cetus turmoil. At press time, SUI was up 3.15% over the past 24 hours, trading around $4 per token. Daily volume surged 112%, reaching nearly $2.5 billion, signaling increased attention and speculation amid the news.
SUI has also enjoyed a 75% rally over the past month, and for now, appears relatively insulated from the liquidity shock impacting the Cetus ecosystem.
Awaiting Clarity
As of now, Cetus has not released a full incident report. The smart contracts remain paused, and traders are left waiting for the next steps. The event serves as a stark reminder of the risks associated with oracle dependencies in DeFi protocols and the importance of robust failsafe mechanisms.
The crypto community will be closely watching Cetus for updates, particularly regarding fund recovery, user compensation, and protocol relaunch plans. Until then, uncertainty looms over the once-promising SUI-based liquidity provider.
