The cross-chain bridge was drained of its assets in less than three hours.
Mere hours after the Nomad token bridge published an Ethereum wallet address last week for the return of funds following a $190 million hack, whitehat hackers have since returned approximately $32.6 million worth of funds. The vast majority of funds consisted of stablecoins USD Coin (USDC), Tether (USDT) and Frax, along with altcoins.
According to research published by Paul Hoffman of BestBrokers, the vulnerability of the Nomad protocol was highlighted in Nomad's recent audit by Quantstamp on June 6 and was deemed "Low Risk." As soon as the exploit was discovered, members of the public joined the attack by copy-pasting the initial hack transaction, which was akin to a "decentralized robbery." More than $190 million worth of cryptocurrencies were drained from Nomad in less than three hours.
The attack came just four months after the project raised $22.4 million in a seed round in April. As told by Hoffman, the attack took advantage of a wrongly initialized Merkle root, which is used in cryptocurrencies to ensure that data blocks sent through a peer-to-peer network are whole and unaltered. A programming error effectively auto-proved any transaction message to be valid.
Not all participants of the heist were capitalizing on the opportunity, though. Almost immediately after the hack began, whitehat hackers copied the same transaction hash as the original hacker to withdraw funds for their safe return. Conversely, one hacker allegedly used their Ethereum Domain Name to launder the stolen funds, leading to the possibility of cross-verification with Know-Your-Customer information also utilizing the domain.
The Google trends data for the popular search terms in 15 countries showed that “Ethereum” searches outscored “Bitcoin” in 14 of them.
The crypto market crash in April saw most cryptocurrencies lose more than 60% of their valuation from the top, leading to an overall downturn in trading activity, investor interest and venture capital investment. A recent study has highlighted nations’ growing curiosity and interest in crypto after the April crash.
The research was based on Google Trends data of popular crypto search terms that often reflect increased interest in the crypto market. The search history of each nation was then compiled to give an overall search score. The countries at the top of the list appear to be most eager to buy the dip.
The CoinGecko research highlighted a significant rise in curiosity among Nigerians after the crypto market downturn in April. The Nigerian population searched the term “cryptocurrency,” “invest in crypto” and “buy crypto” the most among the 15 countries that were part of the research and had a total search score of 370.
The following two Google trend charts show the data for “invest in crypto” searches in Nigeria compared to the world. The search density for the term has seen similar interest rates after the April downfall in Nigeria, while the worldwide search density has seen a constant decline in comparison.
Nigeria’s growing interest in crypto is fueled by inadequate financial services in the country, something that has been a key reason for crypto adoption across Africa. As Cointelegraph reported in April, nearly 17.36 million, or 52% of Nigerian crypto investors, have allocated over half of their assets to cryptocurrencies. Nigerians started using crypto as a viable alternative to store and transfer assets.
The United Arab Emirates (UAE) came in second with a search score of 270, which didn’t come as a surprise to many, given the country’s recent push for crypto adoption. Singapore ranked third with a search score of 260, while the United States was ranked 12th with a search score of 157.
The search score data also highlighted some of the top cryptocurrencies that people in these 15 countries searched. Interestingly, Ethereum searches outscored Bitcoin in 14 of the 15 countries, with Singapore leading the chart with a score of 59. The rise in interest toward ETH over BTC could also be attributed to the upcoming Merge to the proof-of-stake (PoS) network slated for the third week of September.
Said inflows reached $16.3 million last week, adding to a total of $159 million in inflows over the last seven weeks.
CoinShares Head of Research James Butterfill on Monday said the rise in market sentiment for Ethereum-focused products is largely due to “greater clarity” relating to the upcoming Merge, which is set for Sep. 19, with Butterfill stating:
“We believe this turn-around in investor sentiment is due to greater clarity on the timing of The Merge where Ethereum shifts from proof-of-work to proof-of-stake.”
The Merge will see the Ethereum mainnet merge with the Ethereum 2.0 Beacon Chain, which will complete the transition from proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The PoS consensus mechanism is expected to make Ethereum more secure, energy efficient and environmentally friendly.
The Goerli and Prater testnet merge is also expected to take place this week, which will be the last scheduled dress rehearsal before the mainnet Merge takes place in less than six weeks’ time.
Traders gearing up
Blockchain analytics firm Glassnode suggested that the highly-anticipated Merge has crypto traders gearing up to “buy the rumor, and sell the news:”
“Derivatives traders are placing directionally obvious bets for Ethereum, specifically relating to the upcoming Merge planned on 19 September.”
In a newsletter titled “Betting on the Merge” on Monday, the analytics firm noted that post-Merge, the ETH options and futures market is positioned in “backwardation” — a situation in which the current price of an asset is higher than the prices trading in the futures market.
“Both futures and options markets are in backwardation after September, suggesting traders are expecting the Merge to be a ’buy the rumor, sell the news’ style event, and have positioned accordingly,” said the firm.
However, the jury is still out as to how the Merge will ultimately affect Ether’s price. In a recent interview, Ethereum founder Vitalik Buterin remained optimistic about ETH’s long-term prospects, saying that the narrative will likely remain positive post-Merge — an aspect that hasn’t yet been priced in:
“Once the merge actually happens then I expect morale is going to go way up. I basically expect that the merge is going to be not priced in, by which I mean not even just market terms, but even psychological and narrative terms. In narrative terms, I think it’s not going to be priced in pretty much until after it happens.”
The price of Ethereum is $1,776 at the time of writing, up 8.6% over the last seven days, according to data from CoinGecko.
This Daily Dose was brought to you by Cointelegraph.