Fall of FTX: a fork to save Serum on Solana

FTX Crisis Spreads – It’s been a week since the FTX platform makes headlines, following a major liquidity crisis. At the same time, many revelations drive the point home for its founder’s platform Sam Bankman-Fried. Unfortunately, this crisis also impacts many other projects and companies with a close link with FTX. This is particularly the case of Serum project on the blockchain Solana.

Security Breach on FTX

FTX’s descent into hell started on November 8th. This follows on from revelations about a liquidity crisis on the exchange. The situation quickly escalated with the appearance of increasingly sordid news.

Loans of client-owned funds from FTX to its sister company Alameda Research, changes to financial statements and more. Every day the image of Sam Bankman-Fried, FTX and all the companies linked to it deteriorates.

The situation took a nightmarish turn on November 12 following the 400 million dollar hack on the FTX platform. The thesis of the back door is not ruled out for the moment.

Anyway, the funds of thousands of users are currently walking around in the wild. A situation that once again reduces the chances of refunds.

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Solana massively impacted

Solana’s ecosystem was closely linked to FTX and Alameda Research, which had multiplied blockchain projects.

Faced with the collapse of the platform, the SOL token price has, too, experienced a major decline.

Unfortunately, the situation could turn out to be even more tragic for Solana. This was pointed out Maximilian Schneiderthe co-founder of Mango Markets, a DeFi protocol operating on Solana.

Indeed, the day after the FTX hack, it shared its Serum project concerns.

Publication of Mango Max vis-à-vis the situation of Serum and FTX – Source: Twitter.

“The Serum program update key was not controlled by the SRM DAO, but by a private key connected to FTX. At this time, no one can confirm who controls this key and therefore has the power to update the serum program, possibly deploying malicious code. »

So the code of Serum could be maliciously modified by FTX in order to steal the funds held by the protocol. As a reminder, Serum is a decentralized exchange protocol that serves as the basis for a multitude of DEXs on Solana.

In practice, this is the source of a monthly volume of 355 million dollars. It is used by nearly 9,000 users daily.

A fork and it starts again

Faced with this threat, the Solana developers did not remain inactive. Indeed, the latter quickly undertook to fork the project code to use a version that is not controlled by FTX.

At least that’s what declared @aeyakovenko on Twitter :

“A priori, the developers of the protocols that depend on Serum are forking the program because the update key of the current version is compromised. A ton of protocols rely on serum markets for liquidity and liquidations. »

Pending the deployment of this fork, many projects such as the aggregator Jupiter have taken the decision to suspend the liquidity source Serum.

“We confirm that we disabled Serum as a source of liquidity a few hours ago due to security concerns regarding upgrade authorities, and we have also encouraged all of our integrators to do the same. »

A Serum hack could prove fatal for the Solana ecosystem. In parallel, the ecosystem has to deal with the massive depeg of several wrapped tokens. Thus, soETH and soBTC have dramatically moved away from the value of the assets they represent.

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