BackWhat does million dollars hack of Binance's BNB tokens teach about crypto market?
Binance announced an exploit affecting the native cross-chain bridge between BNB Beacon Chain (BEP2) and BNB Smart Chain (BEP20 or BSC), known as “BSC Token Hub.”
PremiumIt's not new when you read a cryptocurrency was stolen or a crypto exchange was hacked -- wiping away millions of dollars of wealth. Sadly, this is one of those common drawbacks to expect in the cryptocurrency market. The latest to hit headlines would be the world's largest crypto exchange in terms of trading volumes, Binance whose BNB tokens were stolen last week and the estimated impact is above $570 million. Binance is another example of a reality check in the crypto market.
Last week, on Friday, Binance announced an exploit affecting the native cross-chain bridge between BNB Beacon Chain (BEP2) and BNB Smart Chain (BEP20 or BSC), known as “BSC Token Hub."
In a blog post, Binance said, "a total of 2 million BNB was withdrawn. The exploit was through a sophisticated forging of the low-level proof into one common library."
On Friday, BNB tokens traded between over $280 to a little over the $286 mark on CoinMarketCap. On the morning of October 7, the tokens touched $286.5 and if we take into consideration the 2 million BNB withdrawn by the hackers -- then the loss is approximately around $573 million.
Earlier, Binance estimated funds taken off BSC between $100 million - $110 million.
However, on October 10, at around 2.39 pm, BNB tokens are currently trading $273.70 down by 1.26% on CoinMarketCap. Binance token has taken a blow after the hack as BNB weekly drop extends by over 4%.
At present, BNB is the fifth largest cryptocurrency with a market valuation of over $44 billion.
The Changpeng Zhao-backed company has taken control of the vast majority of funds.
In the next move, Binance plans to hold on-chain governance votes to determine the following four actions for the common good of BNB:
- What to do with the hacked funds, freeze or not to freeze?
- Whether to use BNB Auto-Burn to cover the remaining hacked funds, or not?
- A Whitehat program for future bugs found, $1 million for each significant bug found.
- A Bounty for catching hackers, up to 10% of the recovered funds.
"The BSC validator voting function for general opinions will be switched on in the next few days via an upgrade of BNB Beacon Chain," Binance said.
What does Binance's hack tell you about the crypto market?
According to Dileep Seinberg, Founder & CEO, MuffinPay, Bill Payment & Utility Crypto, being at the nascent stage, cryptocurrencies are vulnerable to some exploitations or compromises. They are not completely immune from such activities. Though they dent the sentiments of investors in the near term if the token is sound enough fundamentally, then one can hold on for the long run. However, ignoring the commentary from the foundation or the magnitude of the exploit becomes a concern.
He added, such activities, in the long run, bode well for the network, which intends to improve the ecosystem, making the network safe and secure for its users. In the rapidly expanding web3 world, this would be the need of the hour to keep such elements at bay.
"The organization said that it will do things in detail after the complete investigation of the matter, but as of now, the hack affected the cross-chain bridge and compromised 2 million BNB tokens. The hack happened between B&B Beacon Chain and BNB Smart Chain. However, after contacting all the validators across 44 time zones, the situation was within control," Seinberg added.
The organization is also planning on introducing a new on-chain governance mechanism for better security in the future.
Also, to protect consumer funds in such incidents, MuffinPay CEO believes there is a need for control and the development of a system that is both centralised and decentralised.
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