September 25, 2023 at 10:19 GMTModified date: September 25, 2023 at 10:19 GMT
September 25, 2023 at 10:19 GMT

Mixin Network in $200m exploit, as founder says only half of assets are safe

Mixin Network’s cloud service provider was hacked in the early hours of 23 September. It has led to a loss of assets worth approximately $200m from the mainnet.

Mixin Network in $200m exploit, as founder says only half of assets are safe

Mixin Network’s cloud service provider was hacked in the early hours of 23 September. The multi-million dollar exploit saw thieves drain assets worth approximately $200 million from the mainnet.

The protocol offers a free, lightning fast peer-to-peer transactional network for digital assets. The recent hack was first reported by blockchain security consultancy SlowMist. The network is now currently working with both Google and the SlowMist team in investigating the attack.

As per Mixin Network’s official announcement, deposit and withdrawal services on Mixin Network have been temporarily suspended. The message further stated: “After discussion and consensus among all nodes, these services will be reopened once the vulnerabilities are confirmed and fixed. During this period, transfers are not affected.”

Questions were raised by people on X (formerly Twitter) on how the database of a decentralised network could be hacked. This is because a lot of Web3 services use a centralised cloud operator where the decentralisation is not used for the customers’ data storage.

As per DeFiLlama, the protocol’s total value locked (TVL) has fallen considerably by around $30m since the news of the attack. It currently stands at $352m.

Along with this, its native token, $XIN, has also fallen by over 7% in the past 24 hours. At the time of press, it was seen struggling in the red, changing hands for a weekly low of $192.66.

Back in January 2018, $XIN had achieved its all-time high of $2,095. It is now 90.7% down from this price level. It had even failed to recover half of its peak price during the 2021 bull market. Traders now fear whether the current attack would pull the token closer to its all-time low of $57.31.

The Mixin team is yet to announce their plan of action for dealing with the lost assets but have assured to try its best in minimising the losses. Its founder Feng Xiaodong explained the recent incident in a public Mandarin livestream which was broadcast at 13:00 HKT today (25 September).

He said that the company can initially only ensure that half of the total user assets on the network are not affected by the hack.

The team will be considering issuing “bond tokens” for users to claim for the rest of the assets. Feng then said that there are plans for Mixin to buy them back in the future. The company is also contemplating to establish a new system to host user assets. Assuring the public, he stated-

“No matter what your assets are — whether it’s Bitcoin or Ethereum — we will ensure that half of it is unaffected. We’re trying to find a way to recover the compromised money, but that is very difficult.”

The network advertises itself as an open-source, lightning-fast, and decentralised Web3 platform to bring speed and scalability to the blockchain. It allows blockchains to gain millions of TPS, sub-second final confirmation, zero transaction fee, enhanced privacy and unlimited extensibility.

It works on proof-of-stake with 26 full nodes. As a wallet solution, it is currently supporting 48 public blockchains like Bitcoin, Ethereum, Avalanche, Polkadot and so on. The total assets on the network have been over $1billion.

Mixin’s July monthly report had stated that the worth of the entire network’s top 100 assets reached a total market value of $1,109,749,948. The whole network has a total of 3,199 (+125) assets too. The report also mentioned that there were 663,489 unique monthly transactions of Bitcoin ($BTC) and 179,647 Ether ($ETH) transactions during that month.

With a user base of over one million, the network had achieved its highest TVL of $2.9bn on 10 November 2021. In the same year on 27 August, it etched its highest Daily Transaction Volume at 4.9 million transactions.