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NFT & web3

Solana’s value plummets below $98 due to a Wormhole Exploit

Many people thought blockchain technology was robust, secure, and virtually “unhackable.” However, the crypto world has faced several hacking incidents that have left many investors with more questions than answers. The most recent one involves Solana, where attackers stole digital assets worth $350 within a short timeframe.

Solana has gained popularity over the last few years, and at the time of writing, it ranks as the fourth-biggest coin. Before the attack, the SOL token was trading as high as $110, outperforming many cryptocurrencies. Unfortunately, the wormhole exploits led to a loss of digital assets, making the coin plummet to $97.03, which is slightly below Solana’s resistance level of $98. The sudden price drop did not deter investors from trading, and their activities increased the value of the crypto to $99.

Coinglass analytics show that digital assets worth $13 million underwent liquidations on SOL. However, the hackers executed most transactions on Binance and FTX crypto exchanges. The former lost more than $5.6 million, while the latter was drained $4.26 million. The hefty financial loss is responsible for a 10% drop in Solona’s value.

On Twitter, Wormhole confirmed that the attack was the cause of SOL token’s price drop. It also claimed that it would take necessary action to add ether (ETH) and protect wrapped ether (wETH) from hackers. Developers took drastic measures to keep the decentralized finance (DeFi) applications running.

DeFi applications are common in the crypto world since they use smart contracts. The Smart contracts allow people to receive Wormhole ETH (wETH), which works in Solana’s DeFi ecosystem. With DeFi, users can access various financial services like lending, trading, and borrowing. However, the exploit is generating serious concerns about the technology. Many traders feel that their assets are unsafe if the blockchain contains loopholes. George Harrap, the founder of the DeFi platform, said that the concerns are genuine, but the coin might become worthless if people stopped backing it.

Experts claim that the attackers exploited the vulnerability in the Solana-Ethereum Bridge. In a blockchain, cross-chain bridges help transfer data between different crypto networks. The exploiter’s footprints show that the attacker used Ethereum-facing smart contract to drain 120,000 ETH.

From the investigations, it is clear that attackers had developed a way to trick smart contracts to digitally “sign” illicit transactions. Kelvin Fichter, the Ethereum developer, said that the signature check program was not running, allowing criminals to cheat the Wormhole system. The fact that there was no automatic signature verification was a surprising discovery that has made many crypto enthusiasts doubt the DeFi protocols. Although Solana developers claim that they have fixed the loophole, the effects of the exploit are still being felt in the crypto world.

Final thoughts

In summary, it seems that cybercriminals are coming up with new hacking tools that can exploit any system. For that reason, many people have started believing that each software might have security holes that black-hat hackers can identify and compromise the entire platform. The Solana wormhole attack might be a disaster, but investors have learned a vital lesson – invest in multiple cryptocurrencies to minimize losses in case of an attack.

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