Haven Protocol price crashes 50% following a security exploit

Haven Protocol, a privacy-focused blockchain project, has suffered a significant exploit that caused the price of its native token, XHV, to plummet by nearly 50%. The price of XHV dropped sharply from $0.0003594 to around $0.0001649, a steep decline that sparked reactions from the community as they learned about the security breach.

The Haven Protocol team confirmed the exploit through a post on X (formerly Twitter), explaining that a vulnerability allowed a hacker to mint a substantial amount of XHV tokens. The team explained that when they checked the amount of XHV tokens on exchanges, they found that it exceeded 500 million XHV, while their internal records showed only about 263 million XHV. This discrepancy indicated that the additional XHV tokens were created through the exploit, with the possibility that the total number of minted tokens could be even higher.

The vulnerability that led to the exploit was traced back to the “range proof validation” code that was introduced in Haven Protocol’s version 3.2 rebase to Monero, a privacy coin that Haven Protocol is based on. This issue allowed the hacker to create new XHV tokens that were not visible in the protocol’s audited supply figures. The problem arose after the audit, when the exploit was applied, and the minting of unauthorized tokens occurred without being detected in the previous audit process.

To mitigate further damage, the Haven Protocol team instructed cryptocurrency exchanges to halt trading on all XHV pairs. This measure was taken to prevent any more of the counterfeit tokens from circulating in the market and to protect the integrity of the project.

Haven Protocol uses a “mint-and-burn” mechanism to ensure privacy and untraceability in its digital assets. Users burn XHV tokens to generate xUSD, a synthetic stablecoin. This exploit, however, threatens the stability of the protocol, as the unauthorized minting of XHV tokens could disrupt the balance of the mint-and-burn system.

The recent exploit adds to Haven Protocol’s ongoing struggles. At its peak in April 2021, the price of XHV reached an all-time high of $28.99. However, the project has lost most of its value since then, with this recent attack further compounding its challenges. The price drop and the exploit have raised concerns about the protocol’s future and whether it can recover from this setback.