Verachain suspends network to prevent balancer-related exploits and conduct “emergency hard fork”

The project’s core team announced on Monday that Berachain validators have orchestrated an emergency outage of the network following the disclosure of vulnerabilities related to the ongoing Balancer V2 exploit.

“Verachain validators orchestrated an intentional outage of the network as the core team performed an emergency hard fork to address Balancer V2-related exploits on BEX,” the Verachain Foundation said in an X statement. “The outage has been carried out deliberately and the network will be operational shortly once all affected funds have been recovered.”

BEX is the network’s largest decentralized exchange, holding more than $50 million in tokens as of Monday.

The issue appears to stem from an access control flaw in the same Balancer Vault that allowed attackers to drain tens of millions of dollars in assets from liquidity pools and over $100 million worth of various tokens from decentralized finance (DeFi) powerhouse Ethereum earlier in the day.

A network outage allows developers to deploy emergency hard forks aimed at isolating compromised contracts and recovering affected assets before resuming operations.

The attack primarily used a series of complex smart contract interactions to attack liquidity pools containing Ethena and Honey tokens.

Since the stolen funds included multiple non-native assets (not just VeraChain’s own token BERA), fixing the problem is not as simple as rolling back a few blocks. Forks are not simple and may include rollbacks and rollfronts.

Meanwhile, VeraChain co-founder Smokey the Vera said on X that approximately $12 million of user funds are at risk and urged validators to work together to take action.

“We recognize that some people will not be happy with this and that this may be seen as a controversial decision,” he said. “While VeraChain does not benefit from Ethereum’s decentralization, we will act to protect our users’ funds if they are threatened.”

Monday’s Balancer exploit rippled across the DeFi market, impacting several forks including Beets Finance, which also confirmed a security breach in Balancer and its v2 pool.

Balancer’s BAL token has fallen about 8% in the past hour, while Berachain’s BERA has fallen 6%.