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Solana Fails to Process Transactions… Again. Wormhole bridge hacked.
In late January, the Solana () blockchain experienced another network issue that clogged the network and caused transactions to fail. The network was “down” for ~four hours due to a suspected DDoS attack. This marks (at least) the fourth time in Solana’s short existence that the network has been clogged to the point of unusability, often during the worst times when markets are cascading down. Strangely enough, Solana Labs Co-Founder Anatoly Yakovenko seems dismissive of the issue, stating it’s just the “pain of getting a new run-time commercialized.”
Solana suffers from the fact that they do not have a traditional fee market for transactions like in Bitcoin and Ethereum. In those networks, during times of congestion, fees become more expensive as users are willing to pay more to have their transactions included in the next block. With Solana, because they do not have a fee market, users that want to transact during congested periods sometimes simply cannot. Transaction attempts fail. This is the tradeoff made by Solana: transactions are fast and cheap much of the time, but in critical periods, the user experience is degraded to the point where the chain won’t accept any more transactions.
In more bad news, just last week, the Solana ecosystem was shaken by a major hack of the blockchain bridge entitled ‘Wormhole.’ The hacker(s) were seemingly able to steal ~120,000 ETH (~$300 million) due to a smart contract bug on the Solana side of the bridge.
Wormhole serves as a "bridge" between Ethereum and Solana, enabling users to send cryptoassets between the two blockchains. Essentially, the attacker was able to mint 120,000 Wormhole ETH on Solana, bypass the bridge “Guardians” in place, and withdraw it back to Ethereum. As the crypto ecosystem becomes more built-out and users will want to use multiple chains, bridges will become vitally important. Bridges are a security liability and a honeypot for hackers. Users need to understand the risks involved. A good starting point is CryptoEQ’s own Ethereum Upgrade CORE+ report in which various bridge technologies are covered.
The code vulnerability has since been patched and Wormhole, with help from well-funded backers, was able to reimbursed all the missing ETH on the Solana chain. A detailed breakdown can be found . While Solana victims appear to be getting reimbursed, this cannot be expected in future hacks, of which there will be more. Looking back, DeFi hacks in 2021 amounted to ~$1.5 billion. As crypto grows and becomes more valuable, this number is expected to increase.
The United States Department of Justice (DOJ) announced this week that law enforcement seized 94,000 bitcoin (~$3.5B) linked to the 120,000 bitcoin stolen in the 2016 Bitfinex hack. Check out this to see how the FBI did it!
Finally, also this week, the Polygon-based DeFi protocol QiDAO suffered an exploit of the Superfluid vesting contract resulting ~$13 million being stolen. The team emphasized that user funds on QiDao contracts are safe as the vulnerability is limited to Superfluid.
