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

Linea, the Layer-2 blockchain built on Ethereum, has unveiled its strategy to decentralize its network in the wake of a necessary pause in block production. This pause was prompted by a security breach at Velocore.

The move to decentralize follows an incident at Velocore, a decentralized exchange operating on the Linea network. This breach led to the illicit withdrawal of 700 ETH, equivalent to around $2.6 million, facilitated through a third-party bridge.

Linea’s Response to Velocore Hack

On June 2nd, Velocore, a decentralized exchange (DEX) running on Consensys’ zero-knowledge Ethereum Virtual Machine (zkEVM) and Matter Labs’ zkSyncEra, fell victim to a significant exploit impacting its volatile pools. These pools contain liquidity for assets with no correlation.

The exploit resulted in a reported loss of roughly $6.8 million worth of ether for the Velocore team. It targeted vulnerabilities in their “Balancer-style CPMM pool contract.” Notably, the exploit was isolated to volatile pools, leaving stable pools unaffected.

Following the breach, Linea took action by suspending block production. This decision came after receiving an alert from the blockchain security firm Hexagate regarding the exploit. The attacker managed to withdraw 700 ETH (about $2.6 million) through a third-party bridge.

In response, Linea implemented several ecosystem security measures to contain the damage. These measures involved suspending the blockchain sequencer, effectively blocking the exploiter from transferring additional funds out.

“Linea’s team opted to halt block production by pausing the sequencer and blocking addresses associated with the attacker to safeguard the users and developers in our ecosystem,” the company explained. “A significant factor in our decision to pause the sequencer was the hacker’s acquisition and initial sale of a substantial amount of tokens for ether.”

“This action was a last-resort measure to shield Linea users,” the team emphasized, underscoring the necessity of the action. Given the timing of the incident, immediate communication with Velocore wasn’t feasible.

Similar to many Layer 2 solutions, Linea is currently in its developmental phase, providing the team with certain protections, such as the ability to pause the sequencer. This step was taken between blocks 5081800 and 5081801 to minimize the impact of the exploit.

Linea Prioritizes Decentralization Amid Sequencer Incident, Sets $3B TVL Goal

Linea has unveiled its strategy to decentralize its network following a recent security breach at Velocore, which prompted Linea to halt block production after the unauthorized withdrawal of 700 ETH. The core team emphasized that decentralization remains a key objective to prevent similar incidents in the future. Decentralizing the sequencer, which orchestrates and batches off-chain transactions before submitting them to the Ethereum mainnet, is deemed crucial for the network’s resilience.

“Linea aims to decentralize our network, including the sequencer. As our network evolves into a decentralized, censorship-resistant environment, Linea’s team will relinquish the ability to halt block production and censor addresses,” stated Linea.

Currently, Linea, like many Layer-2 solutions, relies on centralized technical operations to safeguard ecosystem participants. Despite this dependency, the team is dedicated to fostering a permissionless and censorship-resistant ecosystem.

In response to the breach, Velocore and Linea have urged centralized exchanges (CEX) to freeze the exploited funds. Additionally, Velocore is instituting an on-chain negotiation process to address the situation.

This incident has spurred commentary from industry leaders. Matter Labs’ CEO, Alex Gluchowski, underscored the importance for Layer 2 networks to prioritize decentralization. Linea’s product lead, Declan Fox, reaffirmed the project’s commitment to decentralization in response to Gluchowski’s remarks. “Linea is aggressively progressing towards decentralizing all facets of the network within a robust timeline,” Fox stated.

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