August 10, 2022
It’s not all sunny on Solana Beach. The Solana blockchain is vaulting over yet another hurdle, just weeks after the crypto market made an aggressive move south. The world’s sixth-largest blockchain by market capitalization experienced a perplexing hack yesterday evening. It has resulted in more than $5.3 million in losses.
That number, in the crypto scheme of things, is nothing. Earlier this week, the Nomad Bridge was taken for $190 million. However, what makes the Solana hack particularly troubling is that – nearly 24 hours after the hack began – nobody really knows what’s going on. All we know is that some 8,000 hot wallets (a hot wallet is a software wallet connected to the internet) have been drained of their SOL, USDC, and SPL tokens.
As of this hour, there is lots of speculation as to what caused this exploit. The initial consensus was that a DeFi protocol might have been hacked, something which happens fairly often and results in tears for many investors. However, it has since become clear that the root problem lies with hot wallets; this has largely been validated by the number of hacked wallets which were on Phantom and Slope, two Solana-based web and mobile wallets.
Reporting from Rekt News indicates that other theories include “leaky extensions to a mobile malware epidemic to a bug in the underlying cryptography.” Solana co-founder Anataoly Yakovenko suggested it could be an iOS-specific exploit.
Users which have assets in hot wallets on Solana have been encouraged to transfer them to a centralized exchange such as Coinbase or a hardware wallet such as a Ledger just to be safe.
At its core though, this unsolved mystery just means more headache for the crypto market… call that a complex migraine. The market has been down in the dumps since the collapse of the Terra blockchain (and the subsequent collapse of Bitcoin, the broader crypto market, and dozens of crypto-facing firms.)
It’s also a friendly reminder of just how fragile, and complicated, the crypto space can be. Many investors have no idea what they actually invested in, and despite many investors being firm about “HODLing” and buying the dip, many are waking up to unhappy realities.