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Crypto: Solana mass hack and ripple on the rise

·5-min read

Watch: Solana mass hack and Ripple on the rise: The Crypto Mile Weekly Update

US markets dipped after Nancy Pelosi's visit to Taiwan, but the escalating tensions with China failed to rattle the crypto-ecosystem. However, two serious hacks have dented the reputation of the blockchain-based industry.

On Wednesday, thousands of solana (SOL-USD) wallets were drained of funds a day after a "crypto-bridge" called Nomad lost around $200m (£165.3m) in a hacker attack.

The Crypto Mile's Weekly Update checks in on the price movement of three blue-chip cryptocurrencies, ethereum (ETH-USD), solana and ripple (XRP-USD).

Read more: Crypto live prices

Ethereum has failed to rise in the past week despite the upcoming merge, and was down 0.57%, standing at $1,627 as of the time of writing.

Solana dipped, suffering after the reputational damage of the latest hack. SOL was at $39.21, down 1.8% in the past week.

However, ripple had an impressive week and was up almost 5% in the last seven days, at $0.37.

Solana SOL cryptocurrency physical coin.
On Wednesday, thousands of solana wallets were drained of funds a day after a "crypto-bridge" called Nomad lost around $200m in a hacker attack. Photo: Getty

Thousands of Solana wallets hacked

On Wednesday thousands of crypto wallets on the solana blockchain were drained. According to solana's official Twitter (TWTR) account, "approximately 7,767 wallets have been affected".

The solana team added: "Engineers from multiple ecosystems, with the help of several security firms, are investigating drained wallets on solana. There is no evidence hardware wallets are impacted."

Phantom and Slope digital wallets, which are non-custodial wallets, have been drained of around $5m.

The investigation is attempting to understand how non-custodial wallets could be drained of their funds.

Crypto analysts are speculating that this mass-hack could signal a fundamental issue with the solana blockchain.

Non-custodial wallets like Phantom and Slope are meant to ensure maximum protection, as only the owner of each wallet has the private keys to access funds.

Digital generated image of abstract circular data tunnel visualising speed and technology.
Tuesday's hack revealed a serious vulnerability in these so-called blockchain 'bridges'. Photo: Getty

Nomad 'cross-chain' bridge hack

On Tuesday, a smart contract bug allowed a large number of hackers drain the funds from the Nomad blockchain bridge protocol.

Nomad's goal was to develop a secure cross-chain protocol.

In a matter of hours the blockchain "bridge" application went from having around $200m in it, to zero.

A blockchain bridge protocol, or cross-chain application, allows users to take digital assets from one blockchain, for example the Ethereum network, and send them to another blockchain, for example the Solana network.

Read more: The flippening? Ether overtakes bitcoin in options market for first-time

Tuesday's hack revealed a serious vulnerability in these so-called blockchain "bridges".

In the past year many hacking attempts on blockchain bridges have been successful, such as the Poly Network hack for $600m, the Wormhole hack for $320m, and the Ronin Bridge hack for $615m.

Over $1.8bn in crypto has already been stolen via cross-chain hacks this year alone.

BRAZIL - 2022/06/20: In this photo illustration, the stock trading graph of XRP (Ripple) seen on a smartphone screen. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
Ripple is fighting the SEC over allegations that it engaged in an illegal securities offering through sales of XRP. Photo: Rafael Henrique/SOPA Images/LightRocket via Getty

Ripple on the rise

The price of ripple, or XRP, has shown strength after rising 5% in a week long bull-run. The digital remittance token currently trades at $0.37.

The support that ripple is experiencing at present could be magnified if XRP are successful in the The US Securities and Exchange Commission (SEC) v Ripple ruling.

Ripple is fighting the SEC over allegations that it engaged in an illegal securities offering through sales of XRP.

The SEC v Ripple case has dragged on since December 2020. Ripple Labs Inc. won access to SEC documents to defend against the regulatory body's suit accusing it of misleading investors about its XRP cryptocurrency.

The SEC brought the case against XRP, but claimed privilege in order to keep critical information from being disclosed in court. This came after former director of the SEC William Hinman’s speech was accepted as his personal opinion by request of the SEC. This meant the evidence in a speech he made about cryptocurrencies couldn’t be used on Ripple’s fair notice defence.

A representation of cryptocurrency Ethereum is seen in this illustration taken August 6, 2021. REUTERS/Dado Ruvic/Illustration
The ethereum 'merge' could make 2022 a 'make-or-break' year for the world's second-largest cryptocurrency by market cap. Photo: Dado Ruvic/Reuters

Ethereum flat-lines

Has enthusiasm for ethereum's merge stretched to the point of exhaustion? The second largest cryptocurrency by market capitalisation took an early week tumble and has now stalled in the past two days, hovering around the $1,600 mark.

The ethereum "merge" could make 2022 a "make-or-break" year for the world's second-largest cryptocurrency by market cap, and certain factors involved in the update will make the blockchain's native cryptocurrency, called ether, a deflationary digital asset.

Read more: Ethereum: Two glimmers of hope for crypto investors as crash stabilises

Miners who run validation nodes for the current "proof of work" mechanism are paid around 5% of the total issuance of the cryptocurrency every year. This has made the cryptocurrency inflate by about 4.5% annually.

According to ethereum's Dankrad Feist, this will stop after the "merge", and this "could in some ways benefit the value of ether potentially and make it a better coin to hold."

Feist spoke to Yahoo Finance's The Crypto Mile about the consequences of the merge for ethereum and for the cryptocurrency sector in general.

WATCH: The Crypto Mile: Episode 6 Ethereum insider reveals consequences of 'the merge'