Linea Halts Block Production to Protect Users from a $7M Security Breach on Velocore DEX

Linea, an Ethereum layer-2, halted block production to protect users from a security breach on Velocore, a decentralized exchange (DEX). Over $7 million worth of Ether (ETH) was lost.

Linea, an Ethereum layer-2, halted block production to protect users from a security breach on Velocore, a decentralized exchange (DEX). Over $7 million worth of Ether (ETH) was lost.

The attacker withdrew the funds using a third-party bridge. However, the Velocore team said the exploit was confined to volatile pools, while stable pools remained unaffected.

Block Production Halted

Linea decided to halt block production after the security firm Hexagate alerted the protocol about the exploit. According to Linea, the sequencer was paused between blocks 5081800 and 5081801. This prevented additional funds from being bridged out of Velocore.

“This was the last resort action to protect users on Linea,” the protocol stated on an X post.

However, it also sparked a debate within the crypto community regarding the decentralization among layer-2s and DeFi protocols.

Reasonable, But Questionable?

The Linea team acknowledged the network remains centralized, given that it’s still in the “training wheels” phase. However, the plan is to decentralize the protocol in the upcoming future.

“Linea’s goal is to decentralize our network – including the sequencer. When our network evolves into a decentralized, censorship-resistant environment, Linea’s team will no longer have the ability to halt block production and censor addresses – this is a primary goal of our network.”

Beyond the incident, Linea’s response to the hack —which the protocol justified by saying that other layer-2s also rely on centralized frameworks— drew comments from crypto figures and founders, including Matter Labs’ CEO Alex Gluchowski, who stressed the importance of Layer 2 networks prioritizing decentralization.

“Linea is on a solid path to decentralising all aspects of the network in a very aggressive time window.”

However, Helius Labs CEO Mert Mumtaz acknowledged that the action was reasonable, but it deviated from the original ethos of decentralized finance.

“Consensys’ L2 unilaterally turned off the chain yesterday Reasonable given the circumstances but also a clear sign that this is not crypto.”

Consensys’ L2 unilaterally turned off the chain yesterday

Reasonable given the circumstances but also a clear sign that this is not crypto.

However, the founder and CEO of Matter Labs responded, stating that “Decentralizing the sequencer isn’t optional. Every serious L2 stack must race to do first.”

Linea is a Zero-knowledge (ZK) rollup owned by Consensys, a private blockchain company that develops Web3 and blockchain-based solutions.

The protocol has amassed a wide number of users, with daily active addresses up 196% in the last 30 days.