Flow Blockchain Plans Controversial Rollback to Undo $3.9M Hack — Partners “Blindsided”
Flow’s plan to reverse a part of its blockchain historical past after a $3.9 million exploit has triggered sharp backlash from ecosystem companions. The transfer has reignited a long-running debate over immutability and disaster administration in crypto networks.
The controversy started after an attacker exploited a vulnerability in Flow’s execution layer on Dec. 27, siphoning roughly $3.9 million in belongings off the community by means of a number of cross-chain bridges earlier than validators halted the chain.
Flow Foundation and forensic accomplice FindLabs later confirmed that present consumer balances weren’t accessed and stated the exploit was contained rapidly, with exit routes mapped and freeze requests despatched to main exchanges and stablecoin issuers.
The attacker’s Ethereum pockets was recognized, and investigators stated laundering makes an attempt by means of Thorchain and Chainflip had been being tracked in actual time.
Within hours of the halt, Flow core builders proposed a rollback to a checkpoint prior to the exploit, a transfer that may erase all transactions submitted throughout a several-hour window and require customers and infrastructure suppliers to resubmit exercise.
Flow Partners Question Rollback as Network Activity Freezes
The Foundation framed the rollback as a method to neutralize unauthorized minting and restore the ledger to a clear state. However, the proposal instantly alarmed key companions who stated they weren’t consulted.
Alex Smirnov, founding father of cross-chain bridge deBridge, one in every of Flow’s main bridge suppliers, said he realized of the rollback choice after it was already introduced publicly.
Smirnov warned that reverting the chain may create doubled balances for customers who bridged belongings out throughout the rollback window, whereas leaving others who bridged in dealing with losses with no clear reimbursement plan.
He urged Flow validators to halt transaction validation till the Foundation clarified how these edge instances can be resolved and the way custodians similar to LayerZero, the first USDC custodian on Flow, had been anticipated to deal with affected transfers.
Data from Flowscan showed the community stalled at a set block peak for an prolonged interval, even because the Foundation stated a restart was anticipated inside hours.
The uncertainty rippled by means of the market because the FLOW token fell greater than 40% following the exploit and rollback announcement, and a few centralized exchanges briefly suspended transactions.
Data on DefiLlama confirmed Flow’s complete worth locked dropped from $107 million to $73.8 million after the incident earlier than rebounding to about $97.2 million, a 31% restoration in 24 hours.
Rollback Debate Ends as Flow Adopts Narrow Recovery Plan
Criticism intensified as authorized and technical observers weighed in.
Delphi Labs common counsel Gabriel Shapiro said the strategy risked pushing losses onto bridges and issuers by successfully creating unbacked belongings, whereas Smirnov argued that the monetary harm from a rollback may exceed the unique exploit.
Chain rollbacks stay uncommon and contentious in crypto as a result of they undo confirmed transactions and lift questions on decentralization and belief.
Facing mounting strain, the Flow Foundation shifted course. On Dec. 29, it announced a revised remediation plan developed in session with bridge operators, exchanges, and validators.
The up to date strategy deserted a worldwide rollback and as a substitute targeted on isolating and destroying fraudulently minted tokens whereas preserving professional consumer exercise.
Dapper Labs, which launched Flow, said it reviewed and supported the revised plan.
Under the brand new plan, the community would restart in phases, briefly proscribing accounts recognized by means of unbiased forensic evaluation as recipients of illicit tokens.
Validators later approved a software program improve enabling this focused remediation, and the community returned on-line in a read-only testing mode forward of a phased restoration.
The Foundation stated greater than 99.9% of accounts would stay unaffected, with ongoing updates promised as regular operations step by step resume.
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