The recent incident involving the Linea blockchain is about the ongoing challenges and slow pace of decentralization in Ethereum’s Layer 2 (L2) solutions. Linea’s decision to stop its sequencer after a hack stresses the urgent need for L2 firms to prioritize decentralization.
Key Points Table
The Incident
On June 2, over $2.6 million worth of Ether (ETH) was stolen from Linea, which was launched by Consensys. The hacker exploited Velocore, a decentralized exchange (DEX) based on Linea. This prompted Linea to pause and block production temporarily to prevent more funds from being bridged out. This incident was reported by Linea in a post on X (formerly Twitter).
Reactions to the Halt
According to Alex Gluchowski, CEO of Matter Labs, this decentralization is highly important. Gluchowski stated that decentralizing the sequencer is not optional and that all serious L2 solutions must prioritize it. Declan Fox, Linea’s product lead, agreed with Gluchowski. He mentioned that Linea is on a solid path to decentralization.
Linea’s Future Plans
Linea launched a campaign in April called “The Linea Voyage: Surge”. Its goal is to increase the total value locked (TVL) on Linea to $3 billion. Currently, about $1.2 billion is locked on the blockchain. Despite the recent hack, Linea continues to push forward with its plans.
The Decision to Halt
The Linea team described stopping the sequencer as a “last resort” to prevent further loss of funds. Hexagate, a cybersecurity firm, alerted Linea to the hack and helped trace the stolen funds and identify the exploiter’s addresses. Due to the time zone difference, Linea could not contact Velocore immediately. The sequencer was paused between blocks 5081800 and 5081801.
Decentralization Challenges
Most Ethereum Layer 2 solutions, including Linea, are still in the early stages of decentralization. These “training wheels” phases allow for certain safeguards, like halting the sequencer, to be used in emergencies. However, decentralizing these components is crucial to prevent single points of failure.
Velocore’s Response
Velocore is collaborating with external networks to reimburse the affected users. Linea reassured its users that the network remains safe and secure despite the incident.
Consensys and Linea
In August 2023 Consensys launched Linea. It onboarded over 50 partners and linked more than $26 million in Ether. Despite this progress, Linea, like many other L2 solutions, remains largely centralized.
The State of Ethereum L2 Solutions
The decentralization of L2 solutions is a work in progress. For instance, Coinbase’s Layer 2 solution, Base, is currently centralized with Coinbase as the sole sequencer. However, Coinbase has also expressed its intention to decentralize Base over time.
Key Points to Remember
- Incident: Over $2.6 million was stolen from Linea via a hack on Velocore DEX.
- Response: Linea halted the sequencer to prevent further losses.
- Decentralization: Emphasized as crucial by industry leaders.
- Future Plans: Linea aims to decentralize and increase its TVL to $3 billion.
- Current State: Most L2 solutions, including Linea, remain centralized.
The incident with Linea underscores the critical need for rapid decentralization of Ethereum Layer 2 solutions. While immediate measures like halting the sequencer can mitigate damage, long-term security and reliability hinge on decentralizing the network.
