Decentralized alternate Velocore was hacked for $7M over the weekend.
Ethereum Layer 2 community Linea, developed by Consensys, stated it stopped block manufacturing because of a safety breach at Velocore, a decentralized alternate (DEX) on its community.
On June 1, a hacker managed to use Velocore and steal $7 million of belongings earlier than shifting 700 ETH (roughly $2.7 million) off the community utilizing a third-party bridge. To forestall the attacker from bridging extra belongings, Linea halted the sequencer, its system for processing transactions.
In keeping with Linea, its makes an attempt to contact the Velocore crew have been unsuccessful, prompting the choice to pause block manufacturing.
“The sequencer was paused from block 5081800 and 5081801. Throughout this pause, we gave the Velocore crew time to help their efforts of triaging the vulnerability,” defined Linea. “We additionally censored the hacker’s addresses. This considerably diminished the ecosystem affect on Linea customers.”
The drastic measure was taken as a result of the hacker had begun to promote giant quantities of stolen tokens for ETH, which may have brought on further fallout throughout the ecosystem. Linea stated that halting the sequencer was obligatory to guard the community’s customers.
Aftermath of the exploit
Velocore stated it’s working with exterior networks to reimburse impacted victims. Information from DefiLlama exhibits the overall worth locked (TVL) in Velocore crashed on Sunday from $9.2 million to lower than $1 million following the hack.
The hack additionally considerably impacted Linea’s community exercise. In keeping with knowledge from Dappradar, transactions on Linea dropped by 23% to 261,000 on June 2.
In the meantime, Linea’s lively handle rely decreased by 14% from 479,000 to 409,000 in simply 24 hours, knowledge from Growthepie exhibits.
Group Criticism
Nonetheless, critics argue that Linea’s actions violate the rules of decentralization, a cornerstone of the cryptocurrency business.
Mert Mumtaz, CEO of Helius Labs, criticized the transfer.
“Consensys’ L2 unilaterally turned off the chain yesterday,” he stated. “Whereas it might have been affordable given the circumstances, it clearly exhibits that this isn’t crypto.”
“There’s a spot for centralized crypto to cut back prices between identified events, like in provide chain blockchain,” stated Matthew Gould, founding father of Unstoppable Domains. “Nonetheless, I don’t suppose Linea is making an attempt to be that.”
Echoing these considerations, Alex Gluchowski, CEO of Matter Labs, pressured the need of decentralization in Layer 2 options. “Decentralizing the sequencer isn’t elective. Each severe L2 stack should prioritize this,” he asserted.
In response to the backlash, Linea stated it is shifting in direction of a decentralized community to forestall comparable incidents sooner or later.
“When our community matures to a decentralized, censorship-resistant setting, Linea’s crew will not have the flexibility to halt block manufacturing and censor addresses,” the undertaking stated.
