Solana ecosystem attacked in multimillion pound hack

In May, according to The Block, 455,000 tokens were released on Solana alone - but, does more token choice equal better market conditions?
In May, according to The Block, 455,000 tokens were released on Solana alone - but, does more token choice equal better market conditions?

Solana suffered a major hack which led to more than $5.2m (£4.3m) in funds stolen and around 8000 wallets hit.

The crypto ecosystem was attacked on Tuesday, apparently from a flaw in certain wallet software instead of the Solana blockchain itself, blockchain analytics company Elliptic said. The exact cause is not clear yet.

“Engineers from across several ecosystems, in conjunction with audit and security firms, continue to investigate the root cause of an incident that resulted in approximately 8,000 wallets being drained,” Solana said to CityAM

Updates are to be posted on the Solana Status Twitter as they become available.

“An exploit allowed a malicious actor to drain funds from a number of wallets on Solana”, Solana said. A number of wallets were attacked and drained, with the Solana website displaying warnings on their involvement in the hack. One wallet had more than $3.6m (£2.9m) in it, worth about $90,697 (£71,514) in Solana.

“Wallets drained should be treated as compromised, and abandoned,” Solana said

Solana said there was no evidence hardware wallets had been impacted, urging users to use hardware wallets.

“The hack will definitely cast a shadow over Solana’s credibility as a better alternative to Ethereum, especially when it comes to security,” Mikkel Mørch, Executive Director at Digital Asset Investment Fund ARK36 said, mentioning that it may boost Ethereum’s credibility as the safest and most reliable DeFi ecosystem. 

The Solana blockchain is considered an alternative to Ethereum’s blockchain as it charges lower transaction fees and is used to mine NFTs.

“When the company’s core products – its blockchain and its DeFi ecosystem – regularly suffer from downtime and security problems, you can’t help but think that Solana may have got it all backwards,” Mørch added.

Crypto projects have been extensively targeted by hackers recently as the crypto market crashes with several major attacks occurring this year. 

The Solana theft follows soon after Nomad’s bridge, used to transfer crypto tokens through different blockchains, was looted of about $190m (£156m) this week.

The Nomad hack was among the top ten biggest crypto hacks ever. More than $1bn (£0.8bn) has already been stolen from crypto bridges in 2022, a report by Elliptic in June said, with thefts on the rise. 

Bridges can be vulnerable to attacks as they are not decentralised, have large stores of liquidity, and can sometimes not have as much security, Elliptic said.

Solana has suffered network outages previously, going offline for several hours at a time.