Linea Plans Decentralization After Halting Block Production Due to $7M Velocore Breach

cryptonews.com:

Ethereum Layer-2 blockchain Linea has announced plans to decentralize its network following a deliberate halt in block production due to a security breach on Velocore.

The decision came in response to a security exploit on Velocore, a decentralized exchange on the network, which resulted in the unauthorized withdrawal of 700 ETH (approximately $2.6 million) via a third-party bridge.

On June 2nd, Velocore, a decentralized exchange (DEX) operating on Consensys’ zero-knowledge Ethereum Virtual Machine (zkEVM) and Matter Labs’ zkSyncEra, experienced a significant exploit affecting its volatile pools. Volatile pools are liquidity pools for assets that do not correlate with each other.

The Velocore team reported a loss of approximately $6.8 million worth of ether due to the exploit, which targeted vulnerabilities in its “Balancer-style CPMM pool contract.” They clarified that the exploit was confined to volatile pools, while stable pools remained unaffected.

Emergency Notice
Velocore has been exploited, resulting in the loss of most of the liquidity. Our CPMM pools have been affected, but the stable pools have not been impacted, so funds can be withdrawn on our stable pools.

We are working with security teams and foundations, and…

— Velocore | veDEX on zkSync Era / Linea ▪️ (@velocorexyz) June 2, 2024

Linea responded to the security breach by halting block production. This move came after the blockchain security firm Hexagate alerted Linea to the exploit. The attacker had withdrawn 700 ETH (approximately $2.6 million) via a third-party bridge.