Decoding Optimism’s 36% crash and what went on behind the scenes

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Just days after its launch, the Optimism’s native token, OP faced its first major hit over a $20 mil­lion mis­take. The Opti­mism Foun­da­tion ‘acci­den­tal­ly’ trans­ferred 20 mil­lion OP tokens to the wrong mul­ti-sig wal­let. The error occurred even after two test trans­ac­tions took place over the chain. Aside from the “lost” tokens, OP prices took a huge slump of over 36% after the news broke.

Not so overpowering

The Opti­mism Foun­da­tion con­firmed in a state­ment that 20 mil­lion OP tokens have been sent to the wrong wal­let. The tokens were meant to be trans­ferred to Win­ter­mute, a liq­uid­i­ty provider.

Here’s how the faulty trans­ac­tion occurred as per Optimism:

“Win­ter­mute pro­vid­ed an address to receive the bor­rowed tokens. The Opti­mism Foun­da­tion sent two sep­a­rate test trans­ac­tions, and upon Wintermute’s con­fir­ma­tion for each, sent the rest. Unfor­tu­nate­ly, Win­ter­mute lat­er dis­cov­ered they could not access these tokens because they had pro­vid­ed an address for an Ethereum (L1) mul­ti-sig that they had not yet deployed to Opti­mism (L2).”

It has since been con­firmed that the “attack­er” has sold 1 mil­lion tokens and can “eas­i­ly sell the rest”. The OP team fur­ther pro­vid­ed a guide for users access­ing cross-chain strategy

What is being done?

Mean­while, the Foun­da­tion had made an addi­tion­al grant to Win­ter­mute fol­low­ing the chaos. The grant of 20 mil­lion OP tokens, as con­firmed, will be “tem­po­rary in nature”. The Opti­mism team will fur­ther look to take a com­mu­ni­ty deci­sion if the address were to affect gov­er­nance. So far, the address is yet to impact gov­er­nance on the blockchain. It was also stat­ed that a net­work upgrade could be car­ried out to stop the flow of stolen OP tokens.

Win­ter­mute con­clud­ed with a threat to the “attack­er” stating,

“We are 100% com­mit­ted to return­ing all the funds, track­ing the person(s) respon­si­ble for the exploit, ful­ly dox­ing them and deliv­er­ing them to the cor­re­spond­ing juridi­cal sys­tem. Remem­ber that rob­bers need to get lucky every time. Cops only have to get lucky once.”

The cryp­to com­mu­ni­ty has not been for­giv­ing with a user call­ing out Win­ter­mute as “ama­teur hour”. The user, with a 22,000+ fol­low­ing on twit­ter, also indi­cat­ed at a poten­tial “inside job” aimed at both parties.

What next fro Optimism?

The price of the OP token took a nose­dive after the inci­dent unfold­ed on June 8 and crashed by more than 35%. The price stood at $1.12 before and dropped around to $0.72 after the confirmation.

Source: Coin­Mar­ket­Cap



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