Solana-based Cypher Protocol smart contract freezes, causes outburst as network responds to $1 million exploit
- Solana-based Cypher Protocol has experienced a security incident, leaving the network with around $1 million in losses.
- The incident has led the protocol to freeze its smart contract as the network appeals to the hacker for next possible action.
- The exploit threatens the popularity of the protocol’s stability and its liquid staking offering under Solana blockchain.
Solana (SOL) blockchain’s Cypher Protocol is the latest headline in the list of crypto hacks, after suffering an exploit during the afternoon hours of the US session on August 7. The incident has caused up to $1 million in losses, with the network working out a possible recovery.
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Solana’s Cypher Protocol exploited for $1 million
Solana blockchain is the latest ridicule on Crypto X after one of the protocols under its umbrella, Cypher, was exploited for $1 million. In response, the network has frozen its smart contract, to pave the way for interventions, with the objective to recover as much of the loot as possible. Accordingly, the Cypher Protocol has appealed to the exploiter for negotiations, citing “potential next steps.”
Cypher has has experienced an exploit/security incident. The smart contract has been frozen.
— cypher ©️ (@cypher_protocol) August 7, 2023
The team is currently working with individuals and investigating
To the hacker: We are writing to see whether you would be open to speaking with us about any potential next steps.
Crypto researcher Messari has confirmed the news of the hack, presenting the incident as a detractor from Solana blockchain’s record of accomplishment after managing to grow its total value locked (TVL) by a remarkable 15% across July to $310 million. This was no mean feat, considering most of the major blockchains like Ethereum (ETH), Binance Smart Chain (BSC), Arbitrum (ARB), Polygon (MATIC), and Avalanche (AVAX) are recording declines.
Solana managed to grow its TVL last month, as most major chains declined pic.twitter.com/zVwUgy7Mtp
— Messari (@MessariCrypto) August 7, 2023
Chatter, though unconfirmed, suggests that the exploiter may have used the Binance exchange to fund their wallet as well as cashing out, with users appealing the CEO Changpeng Zhao for assistance to recover the loss. Citing one user:
This is hacker’s wallet: HHm4wK91XvL3hhEC4hQHo544rtvkaKohQPc59TvZeC71 Funded on Binance we believe. CZ and Binance please assist the team to uncover identity.
Notably, Cypher stands among the most advanced Solana-based protocols, an attribute that is credited to incentivize traders and depositors, who are awarded points akin to what happens during airdrops. With such a motivating loyalty program, Cypher has earned a place among the blockchain’s fastest-growing protocols.
Frozen smart contract causes outburst
The exploit seems to have dented the good standing the blockchain had with users, as community members show criticism for the freezing of the smart contract. Until it is unfrozen, users cannot perform transactions on the Cypher Protocol.
Amid the backlash, and as victims hold out hope for recovery, the incident has attracted criticism to liquid staking on the Solana blockchain.
And people wonder why liquid staking on solana is so quiet. Chasing yields and airdrops on shitty protocols. Just not worth it for a few extra %s
— Tippy toes (@Undeniable_kek) August 7, 2023
Nevertheless, optimists acknowledge the strides the network has made against industry peers in term so transactions speed and cost.
on the positive side
— PSY (@PSYTWEAK) August 7, 2023
this exploit was much faster than ethereum and the hacker paid hardly any fees
As negotiations continue, one possible objective is to get the bad actor to refund most of the loot (say 90%), for a percentage of the exploit, say 10% akin to what happened in the Curve DAO (CRV) case. In return, the protocol could commit not to pursue prosecution and let the hacker use the 10% at will. In the dire case, the protocol could offer a bounty for anyone who has insights about the exploiter.
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Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
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Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
