Decentralized perpetual trading platform GMX suffered a $42 million exploit due to a design flaw in its v1 protocol. The vulnerability allowed attackers to manipulate the global short average prices, which directly affected the calculation of the total asset under management (AUM) and led to the manipulation of GLP token prices. By exploiting the timelock.enableLeverage feature through a reentrancy attack, the perpetrators created large short positions, artificially inflating GLP prices and profiting from redemption operations. This incident highlights the inherent risks in DeFi projects, even for established platforms like GMX.