Velocore DEX attacked, $6.8 million gone, Linea network immediately stops producing blocks: protecting users first

A decentralized exchange DEX Velocore, built on Linea and ZKsync, recently suffered a major attack. The Linea team quickly implemented security measures within the ecosystem to minimize damage and protect users, although they opted for a "centralized" technical solution.

700 ETH to be withdrawn, what will Linea do?

Linea stated that after Velocore was attacked, the attacker managed to transfer 700 ETH out of the Linea network through a third party. In the early stages of the attack, Velocore was still vulnerable, and Linea attempted to contact their team but to no avail.

Last resort: halting the Sequencer

As the situation worsened and other methods to resolve the attack proved ineffective, Linea's team made the critical decision to halt the sequencer. This was done to prevent further funds from being withdrawn, thus safeguarding users on the Linea network. The sequencer was paused between blocks 5081800 and 5081801, providing the Velocore team with the necessary time to address the vulnerabilities.

Blocking the attacker's address

During the sequencer halt, Linea also blocked the attacker's address to minimize the impact on the Linea user ecosystem. Linea acknowledged that the decision to stop block generation and block the attacker's address was not taken lightly. However, the attacker had already begun selling a large amount of tokens for ETH, posing additional challenges to the ecosystem beyond depleting the Velocore liquidity pool.

Linea: Still on the path to decentralization

Faced with the need to address cybersecurity through centralized means, Linea stated that their goal is to achieve network decentralization, including decentralization of the sequencer. Once the network matures to a decentralized and censorship-resistant environment, the team will no longer have the ability to stop block generation or block addresses.

Currently, like many other Layer 2 L2 solutions, Linea still relies on centralized technical operations to protect ecosystem participants, with the core value of creating a permissionless, censorship-resistant environment.

Velocore's post-incident analysis and security measures

Velocore has released a post-incident analysis of the attack, revealing that all CPMM pools in Linea and zkSyncEra Velocore were affected, while the stable pool was not. The Velocore team is actively engaging in on-chain negotiations, freezing CEX funds, and compensating users. Velocore admitted to losing $6.8 million worth of ETH.