In a surprising turn of events, the token for the layer-1 blockchain Shido experienced a staggering 94% drop within just 30 minutes. This came after the blockchain’s Ethereum-based staking contract was exploited by an unknown party.
PeckShield, a reputable blockchain security firm, alerted its followers about the sudden drop in value in a post on February 29. In a subsequent post, PeckShield explained that the exploiter successfully transferred the Ethereum staking contract to another address. The new owner then upgraded the contract with a hidden function, allowing them to withdraw the staked tokens.
According to CoinGecko data, the attacker managed to withdraw over 4.3 billion Shido tokens, which is nearly half of the total supply of approximately 9 billion tokens. Prior to the drop, these tokens were valued at around $35 million.
An on-chain researcher known as ZachXBT discovered that the exploiter’s address was funded with cryptocurrency that was first bridged from the cross-chain protocol Layerswap, and then from the Arbitrum blockchain. ZachXBT also claimed to have identified the real identity of the wallet owner who funded the exploiter, but noted that this individual’s assets were also suddenly transferred before funding the exploiter.
Shido is a layer-1 proof-of-stake blockchain that has yet to launch its mainnet. According to a post on February 24, the team behind Shido announced that the mainnet launch would take place “next week.”
The SHIDO token is an Ethereum-based ERC-20 token that can be staked on the project’s connected decentralized exchange (DEX) to earn an 8% annual yield, as stated on the project’s website. Shido has not yet responded to requests for comment regarding the contract exploit.
In 2021, there were over 600 crypto-related hacks resulting in $2.1 billion in losses, which marked a nearly 30% decrease from the previous year. In January of this year alone, there were 30 attacks resulting in $182.5 million lost, according to PeckShield. February also saw significant losses, with $290 million stolen from PlayDapp and additional funds stolen in various wallet breaches and phishing scams.
Lawmakers in the United States have been driven to propose crypto regulations due to their concerns and uncertainties surrounding the industry.