Saga Layer-1 in Crisis as TVL Crashes 55% and Token Plunges 25%, Here’s Why
Layer-1 blockchain protocol Saga has confronted a extreme disaster after a sensible contract exploit on its SagaEVM chain resulted in practically $7 million in losses.
The incident has compelled the workforce to halt operations, triggering a pointy sell-off of its native belongings.
$7 Million Exploit Sparks Panic on Saga L1
Saga confirmed in a press release that the exploit occurred on January 21, 2026. The Layer 1 (L1) cited a coordinated sequence of contract deployments, cross-chain exercise, and subsequent liquidity withdrawals.
They paused the chain at block top 6,593,800 whereas the workforce investigates and mitigates the incident. SagaEVM stays halted as engineers validate the total affect and implement safeguards to forestall additional breaches.
“At this stage, SagaEVM stays paused whereas our engineering and safety groups work by means of a full remediation course of,” Saga said. “Our present focus is to cease additional affect, validate the blast radius, harden affected parts, and talk solely confirmed details.”
The firm emphasised that the Saga mainnet, consensus mechanisms, and validator safety stay intact. Bad actors didn’t compromise signer keys.
What Happened and the Implications for Saga Dollar Token and Network’s TVL?
Reportedly, the attacker exploited a vulnerability in the protocol’s cross-chain messaging system. With this entry, they minted Saga Dollar (D) tokens out of skinny air. They bridged them to Ethereum and transformed to ETH by way of decentralized exchanges such as 1inch, CowSwap, UniV4, and KyberSwap.
Threat researcher Vladimir noted that the funds have been traced to 0x2044697623afa31459642708c83f04ecef8c6ecb, and Saga is actively coordinating with exchanges and bridges to blacklist the deal with.
The rapid fallout was dramatic. Saga Dollar briefly misplaced its $1 peg, falling to $0.75, and its whole worth locked (TVL) plunged over 55% inside 24 hours, dropping to $16.07 million.
Meanwhile, knowledge on CoinGecko reveals the Saga Dollar token is presently buying and selling round $0.7559, down 24.1% from its earlier ranges.
Cosmos Ecosystem Reeling: Mars Protocol Plots March Shutdown
The exploit echoes broader turmoil in the Cosmos ecosystem, the place Mars Protocol introduced an entire wind-down following a earlier exploit that left roughly $960,000 in dangerous debt concentrated in its USDC lending market.
The Mars Protocol Foundation will function solely till March 23, 2026, to conduct a managed shutdown and mitigate danger. Meanwhile, the Amber Protocol could proceed underneath new administration.
The Neutron Foundation has been tasked with coordinating impartial remediation efforts for affected customers.
Saga, Cosmos, and Mars Protocol are all interconnected throughout the broader Cosmos ecosystem.
- Cosmos is the foundational ecosystem and tech stack (SDK + IBC).
- Saga is an infrastructure layer/mission constructed on Cosmos SDK, enabling straightforward deployment of many appchains (together with potential for DeFi or gaming-focused ones).
- Mars Protocol is a DeFi utility/protocol working throughout the Cosmos ecosystem, utilizing its personal Cosmos SDK chain (Hub) and IBC for cross-chain performance.
While they don’t seem to be immediately built-in, they coexist and thrive throughout the identical interconnected Cosmos.
“The exploit was a turning level none of us needed,” Mars Protocol said in a public replace. “After a danger and duty evaluation, the Foundation concluded {that a} clear wind-down was the accountable path to guard customers and protect integrity.”
The twin shocks, Saga’s $7 million exploit and Mars Protocol’s exit, mirror rising systemic dangers in the Cosmos ecosystem and L1 sensible contract tasks. It highlights vulnerabilities in cross-chain protocols and the necessity for stronger operational safeguards.
Saga has pledged to publish a complete autopsy as soon as investigations are full.
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