As CoinSnacks was going to press last week, Wormhole, a cross-chain protocol that lets users easily transfer tokens between blockchains, lost hundreds of millions of dollars of ETH in the second largest hack of all time.
Last Wednesday, Twitter came alive when prominent pseudonymous Paradigm security researcher @samczsun pointed out that Wormhole was being exploited. Minutes later, the Wormhole team tweeted that the network was “down for maintenance” while investigating a “potential exploit.”
How Did This Happen?
The Wormhole, Solana’s bridge, was tricked into crediting 120,000 ETH as having been deposited on Ethereum, allowing for the hacker to mint the equivalent in wrapped whETH (Wormhole ETH) on Solana. Learn more here and here.
Why Does It Matter?
Without getting too technical, due to the hack, it meant that any ETH that had been bridged to Solana was potentially unbacked. In other words, hundreds of millions of dollars worth of ETH on Solana was effectively worth zero, yet people could still trade it around. Not good.
Within 24 hours, the Wormhole team tweeted that all funds had been restored by Jump Crypto who acquired Certus One, a core developer of Wormhole, in August, 2021. The president of Jump Crypto, Kanav Kariya, said that “Jump put up 120k of its own ETH because we believe in Wormhole and want to support it in this stage of its development. And we’re going to come out stronger than ever.”
Overall, It’s not been a good start to the year for Solana as it has been dealing with outages, disruptions, liquidations, and now a major hack. That being said, Ethereum also had some rough early days, but came out stronger each and every time.