Hedera Network services are experiencing a critical moment with an ongoing exploit compromising the network’s tokens after discovering anomalies affecting various Hedera dApps, Liquidity Pool (LP) tokens, wrapped tokens and their users. The Hedera Foundation (HBAR) tweeted:
We have identified network anomalies affecting various Hedera dApps and their users. The foundation is in contact with affected partners. We are monitoring and working to resolve the issue. Please prepare for more information.
How did the exploit affect the Hedera network?
Hedera is a fully open source and publicly distributed ledger that uses fast and secure hash graph consensus. Hedera’s services include smart contracts based on Solidity, an object-oriented programming language developed by the Ethereum Network team specifically for constructing and designing smart contracts on blockchain platforms.
After According to the Decentralized Finance (DeFi) researcher, who goes by the pseudonym DeFiIgnas, the ongoing exploit has targeted the decompilation process on the Hedera network. Additionally, bridged tokens have been frozen by Hashport, the public utility for businesses that facilitates the movement of digital assets between distributed networks.
To ensure user safety, the Hashport bridge has been temporarily paused, preventing users from accessing multi-chain transactions. As of this writing, the exploit continues to affect the Hedera network.
In addition, the Hedera Foundation reported that it has been in contact with affected partners and is continuing to communicate with them as it monitors and works to resolve the network security breach.
The total blocked value of dApps is falling fast
The decentralized digital asset exchange (DEX) Pangolin has reported that users are having trouble withdrawing their funds from Hashpart-related pools as the various tokens on the network are “paused” due to the “outage”, as are all the smart contracts the Hedera- network experienced.
dApps TVL decreases. Source: DeFiIgnas on Twitter
As seen in the chart above, the Total Value Locked (TVL), which measures the value of deposits and wagers across the dApps and blockchain, is falling rapidly for Hedera dApps. The TVL includes all coins deposited in the functions provided by the DeFi protocols, including stakes, credits and liquidity pools.
Stader Labs, which supports six separate networks that allow users to deposit tokens into liquid staking protocols, was hit the hardest by the current exploit, suffering a 65.46% drop with a TVL of $32 million.
The exploit has had a significant impact on the Hedera hashgraph token, highlighting the downtrend the hashgraph is experiencing since February from a high of $0.0914 to the $0.0589 level.
Hedera Hashgraph is in a downtrend on the 1-day chart. Source: HBARUSDT on TradingView.com
Hedera Hashgraph is in a downtrend on the 1-day chart. Source: HBARUSDT on TradingView.comInvestigations by the network’s core team are underway to identify the security breach of the smart contract network and the cause and further impact on the tokens. The Hedera Foundation concluded:
The Hedera core team is actively investigating the discovered smart contract anomaly. They work directly with teams across the DeFi ecosystem to determine root cause and potential impact. Updates will be provided as they become available.
Featured image from Unsplash, chart from TradigView.com
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