As a seasoned analyst with years of experience in the cryptocurrency market, I can’t help but feel a mix of dismay and concern upon learning about the recent exploit on Terra (Phoenix chain). My journey through this wild and ever-evolving landscape has taught me that security should never be taken for granted.
As a seasoned blockchain enthusiast with years of experience in this dynamic and fast-paced industry, I have witnessed both triumphs and challenges that come with decentralized technology. Recently, an incident involving Terra, a Phoenix-1 blockchain, has caught my attention due to its implications for the broader ecosystem.
Terra Classic Avoided Security Exploit
Despite the recent hack on Terra’s Phoenix chain, Terra Classic – the original blockchain by Terraform Labs – has remained secure. The culprit was an unknown attacker who exploited a weakness in a third-party tool called IBC hooks, which are utilized for cross-chain contract communications and token transfers.
The core developer of Terra Classic, Genuine Labs, used the X platform to inform the broader community that the incident (hack) will not affect LUNC.
“Regarding the recent incident on Terra Money’s phoenix-1 platform, I’m pleased to share some good news: Terra Classic was not impacted because we fixed it in May with our V3 update. This information comes from Genuine Labs.”
Additionally, LUNC relies on Inter-Blockchain Communication (IBC) procedures to communicate and exchange tokens with various other blockchain networks.
As an analyst, I’d rephrase it like this: I, as an analyst, am reporting that Ethan Buchman, co-founder of Cosmos, has voiced his dismay over the recent Terra hack. Given the current financial instability of Terraform Labs, this event has added to the community’s troubles. Buchman stated that while Terra was initially fixed for a vulnerability, it appears that an unintended reversion occurred during their June upgrade.
Really sad to see ths ASTRO hack on Terra. Hearts out to everyone hurt.
Initially, Terra was updated along with others, but it appears that an unintentional reversion occurred during their June update.
Unfortunately they’re using a fork of IBC which makes it harder to stay up to date and…
— Ethan Buchman (,) (@buchmanster) July 31, 2024
Community Response and Security Measures
As an analyst, I’ve been closely monitoring the discussions within the Terra community, and it’s clear that the recent hack has left a significant impact. The report I read underlined the disappointment surrounding the ASTRO hack on Terra, emphasizing that despite initial patching efforts, a fix was inadvertently reverted during an upgrade.
In the meantime, this oversight led to the opportunity for the attack to take place. Using a branch of IBC instead of the original version complicated our ability to apply security updates in a timely manner. This event underscores the need for a collective effort across the ecosystem to reduce the number of branches and ensure swift updates.
The report revealed that Terra, operating on the Phoenix chain, suffered an exploitation due to their continued use of an older version (ibc-go 7.3.x) of the software, which was last updated in September 2023. Unfortunately, this particular version didn’t include a vital security patch discovered in April 2024, leading to the vulnerability.
In my analysis, after the recent hacking incident, Terra opted to update to ibc-go version 7.4.1 to rectify the vulnerability. Interestingly, a user noted that LUNC too has an internal IBC-go dependency; however, it managed to bypass the security exploit thanks to a substantial upgrade spearheaded by Genuine Labs in May 2024. This update incorporated a patch specifically for v7.4.0.
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2024-08-01 00:34