Decentralized alternate Velocore was hacked for $7M over the weekend.
Ethereum Layer 2 community Linea, developed by Consensys, mentioned it stopped block manufacturing on account of a safety breach at Velocore, a decentralized alternate (DEX) on its community.
On June 1, a hacker managed to take advantage of 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.
Based on Linea, its makes an attempt to contact the Velocore staff had been unsuccessful, prompting the choice to pause block manufacturing.
“The sequencer was paused from block 5081800 and 5081801. During this pause, we gave the Velocore team time to support their efforts of triaging the vulnerability,” defined Linea. “We also censored the hacker’s addresses. This significantly reduced the ecosystem impact on Linea users.”
The drastic measure was taken as a result of the hacker had begun to promote massive quantities of stolen tokens for ETH, which may have precipitated extra fallout throughout the ecosystem. Linea mentioned that halting the sequencer was obligatory to guard the community’s customers.
Aftermath of the exploit
Velocore mentioned it’s working with exterior networks to reimburse impacted victims. Knowledge from DefiLlama exhibits the entire 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. Based on information from Dappradar, transactions on Linea dropped by 23% to 261,000 on June 2.
In the meantime, Linea’s energetic handle depend decreased by 14% from 479,000 to 409,000 in simply 24 hours, information from Growthepie exhibits.
Group Criticism
Nevertheless, critics argue that Linea’s actions violate the rules of decentralization, a cornerstone of the cryptocurrency trade.
Mert Mumtaz, CEO of Helius Labs, criticized the transfer.
“Consensys’ L2 unilaterally turned off the chain yesterday,” he said. “While it may have been reasonable given the circumstances, it clearly shows that this is not crypto.”
“There’s a place for centralized crypto to reduce costs between known parties, like in supply chain blockchain,” mentioned Matthew Gould, founding father of Unstoppable Domains. “However, I don’t think Linea is trying to be that.”
Echoing these issues, Alex Gluchowski, CEO of Matter Labs, confused the need of decentralization in Layer 2 options. “Decentralizing the sequencer isn’t optional. Every serious L2 stack must prioritize this,” he asserted.
In response to the backlash, Linea mentioned it is shifting in direction of a decentralized community to stop related incidents sooner or later.
“When our network matures to a decentralized, censorship-resistant environment, Linea’s team will no longer have the ability to halt block production and censor addresses,” the undertaking mentioned.
