As a long-term crypto investor with a keen interest in Ethereum’s Layer 2 solutions, I find myself both intrigued and concerned by the recent events surrounding Linea. The promise of decentralization is a significant draw for many of us in this space, and the idea that a team could manually halt block production on a network with over $1 billion in assets raises some serious red flags.
The Ethereum project’s layer-2 solution, Linea, is demonstrating increased decentralization efforts following the team’s decision to pause block creation manually in order to prevent a malicious hacker from broadcasting illicit transactions.
Linea, Ethereum‘s zkEVM solution designed to improve scalability with over $1 billion in locked value, has found itself in hot water over its what appears to be ambiguous decision to stop the whole network in a bid to censor one address associated with a hacker, who attacked Linea-based decentralized exchange Velocore for $7 million.
As a security analyst on the Linea team, I had to take drastic measures when all other options for addressing the ongoing exploit were exhausted. With the risk of further funds being siphoned off, I initiated an emergency halt on the sequencer to safeguard our users. This decisive action was our last line of defense against potential financial losses.
— Linea (@LineaBuild) June 2, 2024
On June 3 in the X project thread, the team announced the halt of new block creation, expressing that this was not a choice made casually.
One reason we decided to halt the sequencer was because a hacker obtained a substantial amount of tokens and started selling them on the Ethereum market. This action could have led to further complications for users within the ecosystem, beyond the expected drainage of the liquidity pool through the exploit.
Linea
The hour-long halt in creating new blocks, specifically between blocks 5,081,800 and 5,081,801, gave Linea the opportunity to evaluate the circumstances. During this timeframe, interactions with the Velocore team were initiated and strategies were developed to address the identified vulnerability. (Source: thread’s content)
The action taken sparked apprehension within the cryptocurrency sphere, causing some raised eyebrows due to its impact of halting the entire network, estimated to be worth over $1.2 billion based on L2Beat’s data.
Halting the generation of new blocks with a value exceeding $1.2 billion on the Linea blockchain.
— Vasu Crypto (∎, ∆) (@0x_Lens) June 2, 2024
Linea admitted that its present dependence on centralized technological functions underscores the importance of continual work to shift toward a completely decentralized, censorship-resistant network. However, it emphasized that its fundamental principles are rooted in being “permissionless” and fostering a “censorship-resistant environment.”
Simultaneously, both Linea and Velocore groups have taken actions to tackle the exploit. They’ve engaged in discussions on the blockchain and collaborated with centralized platforms to halt the misused funds. The Velocore team has published a report detailing the impacted pools and their plans to reimburse affected users.
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2024-06-03 14:54