Key takeaways

Harmony’s ONE token fell approximately 40% on Wednesday after an apparent exploit reportedly created around 4 billion new tokens.

Harmony confirmed the attack and instructed the network operators responsible for maintaining the blockchain to install an emergency software update. The project said the patch would prevent the attacker from minting additional ONE tokens.

However, the update does not resolve the status of tokens that were already created. Harmony is still evaluating how to isolate or remove those assets from circulation.

The scale of the incident triggered intense selling pressure as traders assessed the risks of token dilution, exchange deposits, and a potential reversal of blockchain transactions.

Approximately 15 billion ONE tokens existed before the exploit. The creation of another 4 billion represents a sudden supply increase of roughly 26%.

Such a large unauthorized issuance can severely dilute existing holders. If the attacker successfully transfers the newly created tokens to exchanges and sells them, the additional circulating supply could place further downward pressure on ONE’s price.

Harmony has not officially confirmed the total number of tokens minted or explained how the reported 4 billion figure was calculated.

The network was once among the cryptocurrency industry’s largest projects, reaching a market capitalization of approximately $4 billion in January 2022.

Harmony temporarily paused its token bridge to prevent potentially compromised assets from moving between networks.

The project also asked centralized exchanges to block and freeze funds traced to four wallet addresses associated with the incident. By flagging those addresses, Harmony hopes trading platforms can prevent the attacker from converting or withdrawing the newly minted tokens.

Cooperation from exchanges may limit the damage if the assets remain identifiable. However, recovery becomes more difficult if the tokens are swapped through decentralized exchanges, transferred to other networks or divided among additional wallets.

Blockchain transaction monitoring may still allow investigators to trace some movements, but it cannot guarantee that all unauthorized assets will be recovered.

Harmony’s software update is intended to close the vulnerability and stop any additional ONE from being created.

Network operators must adopt the new software for the patch to become effective across the blockchain. A coordinated upgrade is therefore essential to ensure that validators and other infrastructure providers follow the corrected network rules.

Harmony has not publicly identified the vulnerability, disclosed how the attacker gained minting authority or confirmed whether any additional parts of the protocol remain at risk.

Until the project releases a complete technical explanation, uncertainty may continue to weigh on ONE and applications operating on the network.

“We are working on a patch and rollback options,” Harmony said, promising further updates as its investigation progresses.

A rollback would return the blockchain to a state recorded before the exploit. The network would then resume from that point, removing subsequent transactions from its accepted history.

This approach could erase the creation of unauthorized tokens still on Harmony. However, it could also reverse legitimate transactions completed after the selected rollback point.

The ONE/USD 4-hour chart is extremely bearish and efficient, as ONE has lost 40% of its value in the last 24 hours.

The coin briefly dropped to the $0.000605 level before bouncing back to now trade above $0.00074.

The technical indicators suggest that the bears are currently in control. The RSI of 12 means that ONE is currently in an oversold territory. The MACD lines also support the bearish narrative.

If the bearish trend persists, ONE could retest the daily low of $0.000605 before heading towards the $0.00050 psychological level.

However, if the bulls regain control, they would likely seek efficiency on the 4-hour chart at the $0.00112 level in the near term.

The post Harmony’s ONE token crashes 40% following a major exploit appeared first on CoinJournal.

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