Cronos erases two-hour transaction records, reverses $111 million DeFi hack

Cronos rolls back nearly two hours of trading records to recover approximately US$111 million in losses

According to a network post-mortem analysis report released Monday, Cronos, a blockchain network backed by Crypto.com, deleted nearly two hours of trading history in an attempt to reverse approximately US$111.2 million in funding related to the exploitation of the loan agreement Tectonic. According to Cronos developers, the verification node protects about 92% of the relevant funds still remaining on the network by rolling back completed transactions, a move that breaks the traditional expectation that blockchain transactions are irreversible.

The Cronos development team wrote in a statement: "This was a difficult decision. We worked with the verification node to weigh the user's expectations for chain finality against the funding at risk." They added: "Restoring status means 1 hour and 54 minutes of settled transactions must be discarded. If you choose to restart without restoring status, the loaned assets will be completely under the control of the attacker."

The complexity of this decision is that the rollback operation also cancels all legal transactions processed during that time period.

Incident and Details

On August 30, hackers launched an attack on the Tectonic network. Tectonic is a platform that allows users to borrow cryptocurrency with deposited collateral as collateral. The report showed that the attackers used inflated collateral to lend approximately $120.4 million in nine markets by pushing up the price of TONIC tokens in less liquid decentralized exchange markets.

Cronos said that the verification node suspended network operations at 9:32 a.m. EST, and then rolled back 10,961 blocks and erased 1 hour and 54 minutes of transaction records. "Every trade made during this period was reversed, whether or not it was related to an exploit; when the trade resumed, open positions on the real-time app were re-priced." Cronos pointed out.

Despite the rollback, approximately $9.19 million of funds left the Cronos network before the network was suspended. According to subsequent reports, the funds could not be recovered and were outside the scope of the rollback operation.

Preliminary estimates show that the value affected is approximately US$75 million, and the amount bridged out is US$6 million. Data from Cronos showed that lending activity totaled $120.4 million, of which approximately $111.2 million has been reversed.

Network recovery and follow-up measures

Post-action reports stated that after approximately nine hours of offline maintenance, block production resumed at 6:49 p.m. EST on August 30. Authentication nodes require multiple rounds of coordination before restarting the network with the patched software and the same transaction history.

Cronos acknowledged poor communication during downtime and said revoked transactions can now be queried through archived records rather than viewed through a public blockchain browser. "We recognize the disruption this incident has caused to the Cronos ecosystem," Cronos wrote."As network operations return to normal, our focus is on completing reconciliations with the affected platforms and learning lessons from this incident to strengthen ecosystem security."

Other crypto projects have encountered similar difficulties

Other networks have faced similar choices to stop operations or reverse transactions after attacks. According to the project, in August, Maya Protocol suspended operations after the network was attacked, in which attackers exploited six software vulnerabilities and stole approximately $1.65 million in cryptographic assets. Exploited vulnerabilities were also present in Ravencoin, which also prompted people to try to rebuild its blockchain, putting about three days of transactions at risk of being reversed.

Security experts have warned that artificial intelligence may help attackers discover vulnerabilities faster, although Cronos's post-event report did not provide evidence that AI was involved in the Tectonic attack.