Harmony's ONE token dropped 37% after a hack allowed an attacker to mint 4 billion tokens, leading to swift security measures.
Key Points
- Harmony reported a security incident involving the minting of roughly 4 billion ONE tokens, which is about 26% of its total supply.
- Analyst Juiceberg indicated that nearly all minted tokens were transferred to exchanges, with only a small fraction still in the attacker's possession.
- In the wake of the breach, the price of ONE plummeted by 37% to around $0.00077, prompting immediate security measures from Harmony.
Harmony, the layer-1 blockchain, revealed a serious breach where an attacker managed to mint approximately 4 billion ONE tokens, resulting in a significant 37% drop in the token's market price to about $0.00077, according to CoinGecko data.
On-chain analyst Juiceberg first highlighted the incident, noting that this minting accounted for roughly 26% of Harmony’s total supply, which was generated through empty blocks. Out of the minted tokens, around 2.8 billion have reportedly been transferred to exchanges as prices fell.
Juiceberg further commented that the attacker still holds about 115 million ONE tokens, approximately 2.9% of the minted total, with the majority already reaching exchanges for sale or deposits.
In response to this exploit, Harmony announced on social media that it was working closely with exchanges to stop and freeze any involved funds. The team has also been developing a patch to prevent any further unauthorized minting and is exploring options for a rollback to restore the network's previous state.
We are working with our team and appropriate exchanges to stop and freeze the funds.
We will update when we have new information.
— Harmony 💙 (@harmonyprotocol)
After the initial notice, Harmony suspended its bridge and quickly rolled out a patch to instruct validators to update their systems, which took effect shortly after the breach announcement. However, the resolution for the already minted tokens remains pending.
While specifics of the exploited vulnerability are yet to be disclosed, concerns have been raised about the accuracy of the reported total supply, as the totalSupply endpoint did not reflect the minting incident.
Chain Rollback Considerations
A possible rollback would revert the blockchain to its state prior to the hack, eliminating any transactions conducted after the event. This action could negatively impact users who made legitimate transactions during that period.
This incident marks another setback for Harmony, which previously experienced a major security breach in June 2022 when around $100 million was stolen from its Horizon cross-chain bridge, an act attributed to North Korea's Lazarus Group by the FBI.
After the 2022 theft, Harmony faced backlash for its initial proposal to reimburse victims with newly minted ONE tokens, which was later adjusted to a solution funded from its own treasury. The latest incident reflects ongoing vulnerabilities, with significant unauthorized minting occurring again just a few years later.
Currently, ONE's market capitalization is approximately $11.5 million, placing it outside the top 1,000 cryptocurrencies and representing a massive decline of over 99% from its peak price of $0.38 in October 2021.
