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Ethereum Rival Solana Suddenly In Free Fall After Huge $325m Hack

Solana, a blockchain-based smart contract platform that’s risen to challenge the dominant network ethereum over the last year, has been hit by a huge hack.

The solana price, which has rocketed over the last year and outpaced both bitcoin and ethereum, has dropped 10% since details of the $325 million hack were revealed. The ethereum price has also moved lower, down around 5%.

Hackers took advantage of an exploit on Wormhole, a bridge between the solana and ethereum blockchains, causing serious losses for solana traders in one of the biggest ever hacks to hit the booming decentralized finance (DeFi) space.

Wormhole, a communication bridge between solana and other DeFi blockchains, announced last night that hackers had stolen around $325 million in so-called wrapped ethereum (wETH)—another serious blow to the burgeoning network that some think could eventually eclipse ethereum.

“The wormhole network was exploited for 120,000 wETH,” it was posted to the project’s official Twitter account, followed by a post claiming “the vulnerability has been patched” and the team is “working to get the network back up as soon as possible.”

The project’s developers have offered the hacker a $10 million bug bounty for exploit details and the return of the funds, posting the message within an ethereum transaction sent to the attacker’s account.

Solana shot into the crypto top ten last year with the solana price up 1,600% since this February 2021 as investors bet the network could become more widely used for DeFi-based financial services as well as a home for non-fungible tokens (NFTs). The combined value of all of solana’s sol tokens reached a peak of $78 billion last year.

However, the solana price has fallen sharply since then, dropping from $250 per sol to under $100, and falling amid a broader crypto price crash that’s hit bitcoin, ethereum and other major cryptocurrencies.

The hack, the fourth-largest crypto theft of all-time according to analysis by blockchain data company Elliptic, is the latest in a slew of problems for solana which has suffered a number of outages in recent months.

Solana, heavily backed by billionaire FTX chief executive Sam Bankman-Fried as well as a number of high-profile venture capitalist companies, claims to be both quicker and cheaper than the incumbent smart contract blockchain ethereum.

Last month, analysts at Bank of America predicted solana could win a significant amount of market share from ethereum and become the “Visa V +1.3% of the digital asset ecosystem.”

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