The occurrence of a smart contract freeze within the Solana-based Cypher Protocol has led to a significant reaction within the network, triggered by an exploit amounting to $1 million

The Cypher Protocol of the Solana (SOL) blockchain had a security breach on August 7, during the afternoon hours of the US session, marking the latest incident in a series of cryptocurrency breaches. The occurrence has resulted in financial losses amounting to around $1 million, prompting the network to explore potential avenues for recovery.

The Cypher Protocol of Solana was successfully exploited, resulting in a financial gain of $1 million.

The Solana blockchain has recently faced criticism within the Crypto X community following the exploitation of one of its protocols, Cypher, resulting in a financial loss of $1 million. As a reaction, the network has enacted a freeze on its smart contract, thereby facilitating measures aimed at maximizing the retrieval of the stolen assets. Consequently, the Cypher Protocol has made a formal request to the party responsible for the exploitation, seeking a dialogue based on the perceived "potential next steps."

The revelation of the theft has been verified by Messari, a prominent crypto researcher. This occurrence is seen as a setback for the Solana blockchain, which had achieved a significant 15% increase in its total value locked (TVL) during the month of July, reaching $310 million. This accomplishment is noteworthy, given the downward trends observed in some prominent blockchains including as Ethereum (ETH), Binance Smart Chain (BSC), Arbitrum (ARB), Polygon (MATIC), and Avalanche (AVAX).

There is speculation, however unverified, indicating that the individual responsible for the incident may have utilized the Binance exchange to finance their digital wallet and subsequently convert the funds into a tangible form. In light of this situation, affected users have made appeals to the Chief Executive Officer, Changpeng Zhao, seeking his assistance in recovering the incurred losses. Quoting a user:

This is hacker’s wallet: HHm4wK91XvL3hhEC4hQHo544rtvkaKohQPc59TvZeC71 Funded on Binance we believe. CZ and Binance please assist the team to uncover identity.

Cypher is recognized as one of the very sophisticated protocols built on the Solana blockchain. This characteristic is acknowledged for its ability to motivate traders and depositors, who are granted points similar to those received during airdrops. Cypher has achieved recognition as one of the rapidly expanding protocols within the blockchain ecosystem, mainly to the implementation of a highly incentivizing loyalty program.

The occurrence of an outburst is attributed to the freezing of a smart contract.

The occurrence of the exploit appears to have negatively impacted the blockchain's reputation among users, as community members express disapproval regarding the decision to freeze the smart contract. Transactions on the Cypher Protocol are not executable by users until the freezing state is lifted.

In light of the negative response and the optimistic outlook of the affected parties towards their recuperation, the occurrence has garnered scrutiny against the practice of liquid staking on the Solana blockchain.

However, proponents of a positive outlook recognize the significant progress that the network has achieved in terms of transaction speed and cost compared to other players in the market.

As the ongoing negotiations persist, a potential aim might be to persuade the party responsible for the misconduct to reimburse a significant portion of the misappropriated assets, specifically around 90%. This restitution would be accompanied by a corresponding fraction, approximately 10%, of the gains derived from the illicit activity, drawing parallels to the resolution observed in the Curve DAO (CRV) incident. As a reciprocal gesture, the protocol might undertake to abstain from pursuing legal action and grant the hacker unrestricted access to utilize the allocated 10%. In the event of a critical situation, the protocol may consider implementing a reward system to incentivize individuals who possess valuable knowledge or insights into the exploiter.