Security

Ethereum, Solana Mount Recovery Following Crypto Bridge Hack

Ethereum and Solana have both enjoyed healthy gains over the last day. 

Ethereum, the second-largest crypto network after Bitcoin, is currently up over 8%. Solana, another smart contract-enabled network, is up a whopping 11%. 

These double-digit recoveries come shortly after one of this year’s largest exploits. 

Wormhole, a crypto bridge protocol that lets different networks interact with each other, was hacked for $320 million in Wrapped Ethereum on Wednesday. 

Wrapped Ethereum is a cryptocurrency that is pegged (and backed) 1:1 to the price of Ethereum and is interoperable with other Wormhole-compatible networks, like Ethereum, Solana, Avalanche, Binance Smart Chain, Polygon, and more. 

The attacker was able to freely mint 120,000 Wrapped Ethereum without needing to stake an equivalent amount of Ethereum.

Though the exploit was primarily related to how Wormhole and Solana were linked (rather than an explicit bug in Solana itself), the SOL token plummeted. 

And just to clarify – this was not a “Solana bug” in the same way as “theDAO hack” was not an “Ethereum bug”. Both Ethereum (EVM) and Solana are tools and it takes quite some time till people learn how to use those tools safely. And the EVM is simply a few years ahead here.

— Martin Köppelmann (@koeppelmann) February 3, 2022

Shortly after the hack, SOL fell from $111 to $97, before dropping to $95 on February 3. 

The nature of the hack also meant that existing WETH on the Solana network (ported over through Wormhole) was essentially unbacked, as the attacker was able to mint the asset without staking the underlying token. 

To calm markets and return this backing, Jump Crypto, a crypto trading house based in Chicago, stepped in to fill the deficit. 

.@JumpCryptoHQ believes in a multichain future and that @WormholeCrypto is essential infrastructure. That’s why we replaced 120k ETH to make community members whole and support Wormhole now as it continues to develop.

— Jump Crypto 🦬 (@JumpCryptoHQ) February 3, 2022

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.” 

He added that a detailed incident report from Wormhole would soon be released. 

Since then, both Solana and Ethereum have rebounded. SOL is currently back trading just above $105 and ETH is holding about $2,837.

   

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