Solana loses 13% of value after $326M Wormhole bridge hack

Solana (SOL/USD) plummeted to below $100 after cybercriminals took advantage of an exploit on Wormhole, a popular bridge between the Solana and Ethereum (ETH/USD) networks, CoinDesk reported.

SOL fell 13% in the past 24 hours, trading at around $96 at the time of writing. That’s down from around $110 during U.S. hours Wednesday evening.

Up to $13M of liquidations

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Liquidations take place when a trader has insufficient funds to keep a leveraged trade open.  Almost $13 million worth of liquidations took place on futures tracking SOL, Coinglass data showed. Of these, more than $5.6 million were on Binance and $4.26 million were on FTX.

Wormhole prevents DeFi app malfunctioning

The decline came after Wormhole was attacked on Wednesday night. Wormhole tweeted they would add ether over the next hours to make sure wrapped ether (wETH) had 1:1 backing with ether. wETH represents ether on Solana. They did this to prevent malfunctioning of decentralized finance (DeFi) applications.

George Harrap, founder of Solana DeFi platform Step Finance, said in an interview with CoinDesk:

If nobody backs it and the coins are truly gone then Wormhole ETH is worth. Everyone who has a balance of it becomes worthless, DeFi protocols, users, everyone.

More than 120K wETH was stolen

Attackers tricked Solana smart contracts to sign off on an illicit transaction and stole more than 120,000 wETH. Ethereum developer Kelvin Fichter tweeted:

The attacker could effectively lie about the fact that the signature check program was executed. The signatures weren’t being checked at all.

Mixed sentiment on Twitter

Industry sentiment remained mixed on Twitter. Starbloom Ventures founder Evan Van Ness tweeted that the bridge Solana presented as trustless and secure was nothing of the kind.

Crypto fund Cinneamhain Ventures founder Adam Cochran said blockchain bridges could control fund loss in cases of attack through inbuilt security mechanisms. He tweeted:

Feels like bridges should have some sort of second contract that acts like a timelock cold storage. Set capital control limits on how much outflow can happen max and has governance voting for a freeze.