A decentralized finance (DeFi) protocol on the Solana blockchain was hacked, resulting in the loss of up to $2 million in user funds. According to sources, an attacker took control of the Raydium protocol owning authority. Meanwhile, this led to a massive drop in the Solana (SOL) token price.
Solana faces a 7-digit exploit
The hack comes after the coin suffered significant losses in the wake of the FTX liquidity crisis. After the exploit, the crypto community reported on Twitter that the attacker’s account received thousands of Solana tokens. The platform’s attack follows a series of multi-hour disruptions to the blockchain network.
In June 2022, the Solana network stopped producing blocks, resulting in several hours of downtime. It was the ninth time the blockchain was stopped. Raydium confirmed the attack by stating:
An exploit on Raydium that affected liquidity pools is being investigated. Details will follow as soon as more is known. From initial understanding, ownership authority has been seized by the attacker, but authority has been halted for AMM and farm programs for now.
Raydium protocol
At the time of publication, an attacker’s account contained around $2 million worth of crypto coins. Raydium, which allows users to trade between multiple cryptocurrencies without intermediaries, is one of the most prominent platforms in Solana’s troubled decentralized finance (DeFi) ecosystem.
An exploit on Raydium that affected liquidity pools is being investigated. Details will follow as soon as more is known
⁰Initial understanding is that ownership authority has been seized by the attacker, but authority for AMM and farm programs has been stopped for now
Attacker Accounthttps://t.co/ZnEgL1KSwz
— Raydium (@RaydiumProtocol) December 16, 2022
Raydium has approximately $45 million in trading pools by its own calculations. In the previous twenty-four hours, it also facilitated around $4 million in trades in the previous twenty-four hours. It remains uncertain whether the $4 million figure includes the attacker’s illicit withdrawals.
Due to its far-reaching ties to Sam Bankman-Fried’s trading and investment empire, the demise of the FTX exchange has had a devastating impact on the Solana DeFi ecosystem.
CoinMarketCap reports that the current SOL token price is $12.82, down 7.95% in the last 24 hours. $USDC, $SOL, $ZBC, and $UXP were among the tokens transferred by the exploiter.
The Solana market is hit
Previously, forecasts based on technicals predicted that the SOL token would soon surpass $15. The coin touched its weekly high of $14.85 on Wednesday and subsequently followed a bearish trend. Meanwhile, the latest data shows that the Solana community’s social media participation has declined over the past six months.
Solana fans are concerned that the Solana ecology would completely disappear from the DeFi ecosystem given the recent events. On December 15, DeFi and Yield App Labs, a Web3 research firm, released a report on the deplorable state of the Solana network.
“Despite the resilience of the community, the network itself has struggled,” it noted. In terms of on-chain activity, the once hyped “Ethereum killer” is now essentially dead. Additionally, daily on-chain volume for Solana is down a staggering 98.8 percent.
As of early September, daily on-chain volume averaged around $65 billion. According to crypto analysts, it has already dropped to an average of just $742 million per day.
The total daily amount moved on-chain for Solana is also down 98.8%. As of early September, on-chain volume averaged $65.42 billion per day. Solana is currently averaging just $742 million per day.
Most of the value moved concerns SOL, USDC, SRM and ETH.
(3/7) pic.twitter.com/X6zglN5Xly
— Yield App Labs (@YieldAppLabs) December 15, 2022
In just three months, the transaction volume has fallen by over 50 percent. In addition, daily transactions have plummeted from over 35 million in September to around 18 million now. In comparison, Ethereum transactions are down about 16% over the same period.
In addition, the study shows that daily active wallets on the chain have decreased by 59%. At the beginning of September, Solana averaged over 852,000 daily active wallets, which has since declined to around 364,000. In addition, the number of new network addresses every day has almost halved in recent months.
Additionally, daily active wallets on-chain are down 59%. Solana was averaging 852,000 active wallets per day in early September until the FTX crash and now averages 364,000 active wallets.
Daily new addresses have also fallen to 110,000 from 216,000 in October.
(5/7) pic.twitter.com/24mxr99GB0
— Yield App Labs (@YieldAppLabs) December 15, 2022
Decentralized finance (DeFi) in the Solana ecosystem is similarly doomed. Since early September, the total value of frozen assets has plummeted from $1.4 billion to about $400 million. According to DeFiLlama, the 70% decline has exacerbated the whopping drop in TVL from its all-time high of $10 billion in November 2021.
Since the FTX collapse in early November, the coin has lost more than 60% of its value. Most of the crypto market has recovered significantly and entered a consolidation phase.
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