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A security breach on the Shido layer 1 blockchain has caused a dramatic drop in the value of its token, falling over 90% in just a half-hour period.
The incident occurred after an exploit was detected, with blockchain security firm PeckShield first reporting the anomaly on February 29 via a social media post on X.
Further analysis by PeckShield revealed that the exploit involved the unauthorized transfer of the ethereum staking contract from the blockchain to a different address. The new owner later modified the contract with a hidden feature that made it easier to withdraw staked tokens.
According to PeckShield's findings, the exploiter managed to mine over 4.3 billion Shido tokens, representing almost half of the circulating token supply of nearly 9 billion, Cryptocurrency reported. data CoinMarketCap aggregator. Before the exploit, the market value of these tokens was estimated at around $35 million.
On-chain researcher ZachXBT, in a post on X, revealed the exploiter's address ID. This address had received funding via the Layerswap cross-chain protocol before receiving additional funding from the Arbitrum blockchain.
ZachXBT's investigation also suggested the discovery of the true identity behind the wallet that funded the exploiter. However, it appears that the funding wallet itself was compromised, as indicated by an unexpected transfer of its assets before funding the exploiter.
Shido, which operates on a proof-of-stake consensus mechanism, has yet to launch its mainnet, with a advertisement on February 24, hinting at a release scheduled for the following week.
The SHIDO token, based on the ethereum ERC-20 standard, offers staking opportunities on its associated decentralized exchange (DEX) with a promised annual return of 8%.
The Shido breach is part of a broader trend of cryptocurrency-related security incidents. Over the past year, the cryptocurrency sector experienced more than 600 attacks, resulting in losses exceeding $2.1 billion. This figure marked a decrease of almost 30% compared to the losses recorded in 2022. Despite this decrease, the current year has already witnessed 30 attacks in January alone, with losses amounting to 182.5 million Dollars.
Meanwhile, February is shaping up to be a major month for security breaches in the crypto space, highlighted by a $290 million theft from PlayDapp, along with several million dollars lost to wallet breaches and phishing scams.
