Gauntlet Restricts V1 Vault Deposits After Reported op-reth Vulnerability

Gauntlet said on Nov. 5 it is closing supply queues on its V1 vaults, pausing allocations and reducing exposure to LayerZero-bridged assets in response to a reported op-reth vulnerability on some OP Stack chains.

“To the best of our knowledge, no exploit has been reported,” the risk curator said in its announcement.

The measures restrict new capital entering the vaults without, by themselves, switching off withdrawals or the underlying lending markets. Gauntlet curates Morpho vaults by selecting the markets to which depositors’ assets are allocated.

What the Restrictions Mean for Users

Under Morpho’s V1 vault design, the supply queue determines which markets receive new deposits. Emptying that queue blocks new vault deposits. Withdrawals use a separate queue and remain subject to available liquidity in the underlying markets.

Closing a vault’s supply queue does not itself pause borrowing or repayment, which take place in Morpho’s separate lending-market contract. New loans still require sufficient collateral and market liquidity. Gauntlet’s post did not announce a withdrawal, borrowing or repayment pause.

Gauntlet identified the supply-queue restrictions as applying to V1 vaults but did not name individual vaults or chains in its announcement.

The reported issue concerns op-reth, the OP Stack execution client that processes Layer 2 blocks and maintains the resulting chain state. Gauntlet did not provide technical details of the reported vulnerability.

The response follows a separate precaution affecting cross-chain transfers. Frax Finance said earlier on Nov. 5 that LayerZero had temporarily paused certain cross-chain routes as a precaution. Frax said its own assets and smart contracts were unaffected and operating normally, and that user and protocol funds remained safe.

Gauntlet said its measures would apply until the reported issue is resolved, without setting a reopening date.