- Solana Users lost $2 million in cryptocurrency.
- The Raydium Protocol of Solana compromised.
- Data show a decline in social interest in the Solana ecosystem.
Solana has now had a big hack to one of its most prominent DeFi protocols, further causing the network to struggle to recover from the crippling harm caused by the shocking fall of one of its most important supporters, disgraced FTX founder Sam Bankman-Fried.
The Solana DeFi protocol Raydium reported early Friday that a hacker had gained control of the company’s “owner authority” and utilized that privilege to start emptying Raydium’s liquidity pools. Without using intermediaries, users can trade, borrow, and lend crypto assets to one another using DeFi technologies. By enabling users to contribute assets to a pool, frequently in exchange for token rewards, automated market makers like Raydium do this.
An exploit on Raydium is being investigated that affected liquidity pools. Details to follow as more is known
⁰Initial understanding is owner authority was overtaken by attacker, but authority has been halted on AMM & farm programs for now
Attacker accnthttps://t.co/ZnEgL1KSwz— Raydium (@RaydiumProtocol) December 16, 2022
According to Defi Llama, Raydium is the second-largest DEX on Solana, with more than $36M in total value locked. The majority of the $2.2M worth of tokens taken by the attacker were Solana’s SOL tokens, according to cryptocurrency wallet tracking service Nansen.
Otters, a crypto security company, denied that an intelligent contract vulnerability had been exploited and stated that the attacker most likely had access to Raydium’s private keys.
According to a community manager in the protocol’s Discord, Raydium engineers prevented the attacker from accessing the protocol’s liquidity pools at midday New York time.
Hackers steal over $2.2 million worth of digital assets
According to research from blockchain analytics company Nansen, a hacker stole over $2.2 million value of digital assets from such a pool on Raydium in just a few hours, including $1.6 million capital of SOL.
The wallet draining LP Pools from Raydium liquidity pools has received over $2.2M now, including $1.6M $SOL
Track here: https://t.co/IQedsOstPE pic.twitter.com/OAQJgaq5Mc
— Nansen Portfolio (@nansenportfolio) December 16, 2022
The hacker apparently executed the assault using one of the protocol owner’s private keys. How the hacker gained access to that data is still a mystery.
Raydium, one of the most significant decentralized financial protocols in Solana, is seen as the core of the Solana DeFi ecosystem. Because the protocol was vulnerable to such a top-down exploitation technique, several people in the Raydium community proposed utterly discarding it.
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There seems to be a wallet is draining LP Pools from Raydium liquidity pools using admin wallet as a signer without having/burning LP tokens.We withdrew protocol provided PRISM/USDC liquidity from Raydium
WITHDRAW YOUR PRISM/USDC LIQUIDITY FROM RAYDIUM
— PRISM (@prism_ag) December 16, 2022
In the hours following the attack, Raydium’s native token RAY, according to CoinGecko, fell more than 8% to $0.16 at the time of writing. DeFi Llama reports that the entire value locked on the protocol has dropped to $34.73 million as of this writing, a loss of more than 27% over the same period.
The Solana market suffers losses
The community of Solana has been less active on social networks during the last six months, according to the most recent data. Technical indicators had previously predicted that the SOL token would reach $15. On Wednesday, the coin hit a weekly high of $14.85; it has been trending downward since then.
Fans of Solana are worried that recent occurrences may cause the Solana ecology to disappear from the DeFi ecosystem completely. DeFi and Yield App Labs, a web3 research company, published a report on the Solana network’s appalling condition.
The network itself is having trouble, despite the community’s resiliency, reported. The once-hyped “Ethereum killer” is now practically extinct regarding the on-chain activity. Additionally, Solana’s daily on-chain volume has dropped by an astounding 98.8%.
The daily on-chain traffic averaged about $65 billion starting in September. Crypto experts’ data shows that it has already decreased to a daily average of just $742 million.
#Solana DeFi has endured some major liquidity outflows. Reduction in TVL was to be expected as the prices of Solana native assets such as $SOL, $SRM, & $RAY have crashed since the FTX bankruptcy.
Network’s MC has also shrunk 47% since the start of November down to $2.1B.
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— Yield App Labs (@YieldAppLabs) December 15, 2022
The Solana ecosystem’s decentralized finance (DeFi) is equally doomed. The total locked assets have decreased from $1.4 billion to about $400 million since the beginning of September. DeFiLlama claims that the 70% drop has made the massive decrease in TVL from its all-time high of $10 billion in November 2021 even worse.
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