Shido, a first-tier blockchain project, experienced a drastic decline in the value of its tokens, plunging by 94% within a mere 30-minute timeframe following an attack on its Ethereum-based staking contract. The unsettling development was brought to public attention by blockchain security firm PeckShield, which highlighted the significant traffic drop in a post on February 29. Further elaborating in a subsequent post, PeckShield disclosed that the exploit involved the unauthorized transfer of Shido's Ethereum staking contract to a different address controlled by the attacker. Subsequently, the attacker upgraded the contract using concealed functionality to withdraw the staking tokens, resulting in the withdrawal of over 4.3 billion Shido tokens, constituting nearly half of the total circulating token supply.
Prior to the attack, the value of the withdrawn tokens was estimated to be approximately $35 million, highlighting the substantial financial impact of the incident. An anonymous on-chain researcher, ZachXBT, revealed additional details about the exploit, uncovering that the attacker's address received funding through a cryptocurrency initially bridged from the cross-chain protocol Layerswap and subsequently from the Arbitrum blockchain. Moreover, ZachXBT identified the wallet owners responsible for funding the exploiters, noting that they too appeared to have been victims of hacking, as their assets were unexpectedly transferred before being utilized to fund the attackers.
In response to the attack, the Shido team swiftly issued an official announcement, affirming their commitment to mitigating any further threats to the protocol. They initiated an investigation into the incident and encouraged the hackers to engage in negotiations regarding the bounty. Additionally, Shido assured users who staked their tokens that they would receive their assets back, emphasizing their dedication to resolving the situation and safeguarding the interests of their community. Shido, characterized as a first-layer proof-of-stake blockchain, has yet to launch its mainnet, with plans to announce its launch in the near future, as stated in a previous post dated February 24.
The SHIDO token, an Ethereum-based ERC-20 token associated with the project, offers users the opportunity to stake their tokens on the project's decentralized exchange (DEX) and earn an 8% annual yield, according to information provided on its website. Amidst the increasing frequency of cryptocurrency-related hacks, data from PeckShield revealed a concerning trend, with over 600 cryptocurrency-related hacks occurring last year, resulting in losses totaling $2.1 billion, a decrease of nearly 30% from 2022. However, January this year witnessed 30 reported attacks, resulting in losses amounting to $182.5 million. The month of February has also seen notable incidents, including the theft of $290 million from PlayDapp and various wallet breaches and phishing scams leading to millions of dollars in losses.
