$62M Exploit Threatens Blast SZN
A major exploit hit a Blast protocol yesterday, just as Blast seemed to be heating up. Is Blast SZN doomed even with recovered funds?
Logie's Market Summary
Good morning!
Today's top news:
$62M Exploit and Recovery Threatens Blast SZN
Two KuCoin founders charged with Bank Secrecy Act and unlicensed money transmission offenses
Optimism sets aside 850 million $OP ($3.2 billion) for builders
and more....
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🚀 Failure to Launch?
Two days ago I wrapped up the section on Blast with this quote...."Not all that glitters is GOLD. The first major Blast exploit happened last week and given the infancy of this chain and its protocols, other lurking issues may still rear their head."
I'm saddened to report that the "last day since incident" counter was reset last night.
Around 5:30 p.m. ET yesterday, Munchables, a popular protocol and Blast Bing Bang Winner, announced that its lockdrop contract had been compromised.
Munchables has been compromised. We are tracking movements and attempting to stop the the transactions. We will update as soon as we know more.
— Munchables (@_munchables_) March 26, 2024
Due to the size of the exploit, more than $62 million in ETH at a minimum, the industry quickly sprung into action and notable investigator ZachXBT identified the exploiter and alleged a malicious developer with potential ties to North Korea within only a few minutes of the Munchables announcement.
Rollback the Chain?
Not long after the exploit, one potential solution was amplified loudly on the timeline....rollback the chain.
Wait, that's possible?!
Yep.
Technical users on Crypto X began suggesting that Blast was uniquely positioned to solve the exploit by potentially rolling back the chain to a previous state....similar to the rollback/DAO Hack that brought us the present day Ethereum blockchain.
These suggestions brought great debate between many of the top personalities in our industry. Some called it foolish to let more than $62 million flow elsewhere in the name of "decentralization." Ryan Selkis of Messari said that another $62 million to North Korea might be "night night for Crypto in the US."
Others brought up the massive can of worms that rolling back four days of transactions (pre-Munchables lockdrop) would open up. And perhaps most importantly, the precedent that rolling back the chain sets and the danger that exists since one party maintains that level of control.
Is there a right answer? I'm not sure.
A Happy Ending
Fortunately, we didn't have to find out.
In the middle of the night, the Munchables developer and exploiter opted to return all the funds and the private keys to three separate contracts. Now, $97 million is safely secured in a Blast multisig and Blast core contributors are working with teams affected, like Munchables and Juice Finance, to return funds to users.
No ransom, hopefully no lost user funds (they still need to go back to users), and a big sigh of relief for the broader crypto ecosystem. This feels like the best possible end scenario.
As for the practical details about users receiving their funds, Munchables is expected to share more details this week but users will not be held to their previously chosen "locks" and they will also still receive their Blast rewards!
What's Next for Blast?
This section will be a little bit lighter than I was planning when going to bed last night, unaware that a peaceful resolution would be found. But, I'm still thinking about the major implications this has for Blast moving forward, just as it seemed to be gaining steam.
This is now two notable exploits in three business days and despite Pacman's urging that teams should focus on security and seek help with audits and more, the confidence of users must be brutally shaken.
I'll still be using Blast and hoping to stack GOLD where I can, but I'll be holding to my previously shared cautions even more than before, instead opting for opportunities to earn GOLD and points in ways that aren't capital intensive.
That will hold me out of the highest tier of earners, but also protect my downside.
I'm content with that. Stay safe out there.
🚚 What Else Is Happening in NFTs?
Here is the list of other notable headlines from the day in NFTs:
Ethereum led NFT trading volume with $16.1 million in volume on the day (+50%); Bitcoin was next with $13 million (-20%) and then Solana with $7.3 million (+11%)
ETH NFT leaders were slightly red yesterday; Pudgy -1.44% to 13.13 ETH and BAYC -3.69% to 13.19 , and Azuki -0.76% to 5.25 ETH.
Runestone led trading of Bitcoin Ordinals, tallying 25 BTC in secondary volume. The floor bounced back up to 0.037 as well.
Mad Lads were the top mover on Solana, up 0.68% to 148.60 SOL.
CyberKongz announced a partnership with SanFranTokyo.
Illuvium closed a Series A Funding Round.
Claynosaurz completed a snapshot of its OG holders for its upcoming Dacytl's raffle.
SquiggleDAO acquired a 1 million $USDC loan for 11 Squiggles via Zharta.
💰 Token, Airdrop & Points Tracker
Highlighting the major token or airdrop news from the day.
Kamino Finance opened Season 2 of its points program.
Optimism announced its setting aside 850 million $OP, or $3.2 billion at current prices, for builders on Optimism or the Superchain.
Backpack announced it will take its Preseason Phase II snapshot on April 6.
Juice Finance delayed token claims amidst the Munchables exploit, but funds from its Munchables Vault have been recovered.
Nifty Island announced Wave 2 of its $ISLAND Play-to-Airdrop campaign, promising larger rewards.
🌎 Around Crypto and Web3
A few other Crypto and Web3 headlines that caught my eye:
Crypto majors are red this morning; BTC -1.6% to $69,990, ETH -2.1% at $3,573; SOL -5% at $185.
$WIF rebounded strongly towards all-time high before pulling back to around ~$3.18 at the time of writing.
Two KuCoin founders were charged with with Bank Secrecy Act and unlicensed money transmission offenses. Withdrawals started picking up on KuCoin as a result.
NFTfi Foundation sent a teaser suggesting users put notifications and prepare for April.
The fifth richest BTC whale started moving funds for the first time in five years.
3 Major AI Coins express interest in merger.
🗓 Upcoming NFT Mints and Reveals
Today is another slower day of drops without major highlights.
With memecoin energy slowing down, it could be a good weekend for any NFTs that catch momentum - so be on the lookout.
It's also a nice setup for a quality stealth drop.
See the full list and dive in for more details with Swizzy's daily mint monitor.
FLUF World Prysyms (time TBD)
A Day in the Life, Guido Disalle/Transient Labs (1:00 p.m. ET)
SanFranTokyo Visions (6:00 p.m. ET)
Enjoy this write-up and/or want to sponsor the Morning Minute? Follow along with me on Twitter @lhitch09 or reach out via email logan@luckytrader.com.