Key Takeaways
- Zano reverted to block 3,833,000 to halt unauthorized token issuance, erasing a month of blockchain history.
- Freedom Dollar paused token activity and will absorb millions in losses caused by counterfeit fUSD issuance.
- The unprecedented one-month rollback erases all legitimate transactions, socializing losses among all users.
Zano Rolls Back One Month of Chain History to Fix Inflation Bug
Zano is taking action to address unauthorized activity that affected the issuance of both ZANO, the native token, and fUSD, a dollar-pegged stablecoin issued on the chain.
In a statement issued on Sunday, the Zano team said it identified an inflation bug involving Gateway Addresses that allowed unauthorized issuance of Zano and fUSD, but did not identify any compromise of wallet spend keys or ordinary transaction privacy, reporting that the Zano core consensus protocol remained unaffected.
While the team previously stated that the vulnerability fix would involve a one-day chain rollback that would erase all transactions during that period, the approved plan encompasses rolling back one month of transaction history after its latest hard fork, an unprecedented measure in the crypto world.
“To ensure full network integrity, the Zano blockchain has been restarted from block height 3,833,000, immediately prior to Hard Fork 6. This affects approximately one month of chain history. The recovery requires participating nodes, miners, stakers, and services to adopt the update,” the Zano team explained.
All transactions confirmed during this period will not be a part of the recovered chain, and Zano stressed that it was working with the affected counterparties to account for any losses, pointing out that the rollback cannot affect payments settled in other networks.
The Freedom Dollar team acknowledged that “several million dollars’ worth of assets held by Freedom Dollar were exchanged for counterfeit fUSD,” but also revealed that the losses from this incident would be absorbed by the project.
The project directed fUSD holders to pause all economic activity involving token transactions until the Zano chain confirms that the patched chain is stable. “We will set out the conditions for resuming fUSD services and provide a clear route for a full resumption of economic activity around fUSD and the Zano blockchain,” the Freedom Dollar team concluded.
The announcement prompted a mixed reaction from users, some of whom stated that the proposed solution held many complexities and implicitly socialized losses from the affected parties to everyone who used the Zano chain in the last month.