Flow Foundation Announces Recovery Strategy Following Exploit
In a recent announcement, the Flow Foundation detailed notable advancements in its recovery strategy following a $3.9 million exploit of its blockchain infrastructure that occurred last week. As of January 1, the Flow network has transitioned to the second phase of its comprehensive remediation plan, which aims to rectify the exploit’s impact.
Restoration Efforts and EVM Functionality
The blockchain’s core development team has successfully charted a course to reinstate EVM functionalities, while simultaneously enhancing the native Cadence environment. This dual approach is anticipated to bring the EVM operations back online more swiftly than previous projections indicated, contingent on no unexpected obstacles arising.
Flow noted that with everything proceeding as expected, the EVM network could be fully operational within 24 hours of this report’s release. To facilitate this, the Community Governance Council is executing a series of cleanup transactions, adhering to the parameters established by network validators.
Addressing Security Breach and Fraudulent Tokens
In parallel, on the Cadence side, development teams are meticulously verifying accounts to eliminate tokens that were fraudulently generated during the security breach. Concurrently, the EVM layer is being reactivated with specific precautions in place. Certain accounts identified as potentially nefarious will be subjected to temporary restrictions to prevent additional fraudulent activities while the network gradually resumes its typical operations.
Flow has highlighted that this restoration process is intricate, necessitating a careful evaluation and verification of individual accounts. To expedite efforts, the foundation is collaborating with external forensic specialists, ensuring meticulousness in the restoration to safeguard the network.
User Access and Market Impact
Flow anticipates that, once fully restored, over 99.9% of users will regain complete access to their assets across both the Cadence and EVM platforms. The Flow blockchain had to pause its operations on December 27 due to a significant vulnerability within its cross-chain communication protocols, which permitted malicious actors to mint a staggering 150 million FLOW tokens and drain millions in assets towards external exchanges.
The fallout saw approximately $3.9 million siphoned off, and the value of FLOW tokens plummeted nearly 50% as leading South Korean exchanges ceased trading and transfers. Initially, the Flow Foundation proposed a complete rollback of the blockchain to a pre-exploit state; however, this plan faced widespread backlash from the community due to concerns over potential centralization issues and threats to transaction finality, leading to the adoption of the current surgical, multi-phase recovery strategy.
Future Phases of Recovery
As the cleanup for Cadence (Phase 2) and the restoration of EVM functionality (Phase 3) progress, the final stage, Phase 4, will focus on reopening cross-chain bridges and resuming exchange activities, contingent on a thorough verification of the network’s overall stability.
