In a recent cyber breach, the Shido Network’s Layer-1 blockchain suffered a drastic hit when a hacker manipulated an Ethereum staking contract, leading to a staggering 94% plummet in token value within half an hour. The fall in value was first reported by blockchain security firm PeckShield on February 29.
Details of the Security Breach
The intrusion involved the illicit transfer of the Ethereum staking contract to a new address. The hacker established ownership, integrated a clandestine function into the contract, and siphoned off the staked tokens. PeckShield revealed that over 4.3 billion Shido tokens, amounting to nearly half the tokens in circulation, were stolen. Prior to the theft, these tokens had a valuation of around 35 million dollars.
Blockchain detective ZachXBT tracked down the source of funds used in the hack to an address which received cryptocurrencies through the cross-chain protocol Layerswap, originating from the Arbitrum ecosystem. Subsequent investigations indicated that the wallet owner who financed the hack might also have been compromised, based on abrupt asset transfers prior to the incident.
Continued Threat of Blockchain Exploits
The compromised SHIDO token can be staked on the project’s decentralized exchange for an 8% annual return. The Shido team has yet to issue a statement on the hack. PeckShield’s statistics indicate that hack attacks remain a significant threat in the cryptocurrency space with over 600 attacks recorded last year, resulting in a loss of $2.1 billion, and January of this year already witnessing 30 attacks accounting for $182.5 million in losses. February has seen substantial thefts, including a major $290 million breach at PlayDapp.
As the blockchain community awaits Shido’s mainnet launch announcement, this incident underscores the pressing need for reinforced security measures in decentralized finance and the broader blockchain industry.