The project will be blocking wallet, app access and will turn off network proxies on its mainnet. This means that wallets, decentralized exchanges, and centralized exchanges will not be usable. The project stated that its mainnet remains operational and is reaching consensus on new blocks, but the network will be similarly inaccessible to most users. The decision was made as an abundance of caution for users, but it has attracted criticism from users who have questioned the project’s commitment to decentralization.
In an abundance of caution & safety for users, @Hedera is turning off network proxies on mainnet, making it inaccessible.@Hedera core is working through the smart contract irregularities & will re-enable proxies once resolved.
Visit https://t.co/heOGAb4jq3 for the latest.
— Hedera (@hedera) March 9, 2023
The issue was confirmed by Heder on March 9, and the bridge service Hashport also paused its services to help contain the issue. While HBAR gave little information about the nature of the issue, independent blockchain researcher Ignas reported that the issue is related to the decompiling process of smart contracts and specifically affects the Hedera Token Service (HTS). This means that liquidity provider (LP) tokens and wrapped tokens are affected. Hedera has not stated whether any funds have been lost or stolen.
1/ There’s an ongoing exploit hitting Hedera.
All Hedera dApps using Hedera Token Service (HTS), like LP tokens or wrapped tokens are affected.
The exploit is targeting the decompiling process in smart contracts.
Advice: “Get your funds out now.” pic.twitter.com/H5jOhLg9od
— Ignas | DeFi Research (@DefiIgnas) March 9, 2023
Justin Trollip, CEO of Pangolin Exchange, cited by Ignas as the original source of that information, said that Hedera projects such as Pangolin, SaucerSwap, Heliswap, and others are also at risk. Trollip advised users to “get [their] funds out now” — advice that was later repeated by Pangolin in an official capacity.
Due to some Hedera network irregularities, Hashport has paused their bridge, and we’d encourage anyone with HTS tokens in Pangolin Pools and Farms to withdraw immediately.
This is a time critical moment, so we’ll update as soon as we have more information
— Pangolin Hedera (@Pangolin_Hedera) March 9, 2023
HBAR was down 6.2% over 24 hours. Nevertheless, it has performed better than Bitcoin, which was down 7.4% over 24 hours. The decision to turn off access to most services is a result of the smart contract issues experienced earlier by the project. While the decision was made to protect users, it has attracted criticism for Hedera’s lack of commitment to decentralization. The project has not provided any timeline for when access to the services will be restored.
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