Harmony, a Layer 1 blockchain, is investigating a suspected exploit involving the unauthorized minting of nearly 4 billion $ONE coins. The newly created coins reportedly represent around 26% of the existing ONE supply. Considering the huge minting, it has raised concerns about the network’s security and the potential impact on the token market.

The tokens were reportedly minted through empty blocks before approximately 2.8 billion ONE were quickly transferred to cryptocurrency exchanges. The movement coincided with a sharp decline in the price of $ONE. The remaining balance available for potential sale was later estimated at around 115 million $ONE.

Unauthorized ONE Minting Triggers Sharp Price Decline

The suspected exploit had a significant impact on the ONE market. The token fell by approximately 26% to 36%, while some intraday wicks approached a 50% decline. ONE also briefly reached a new all-time low of around $0.0005735 before recovering partially. At a post-exploit price near $0.0008, the 4 billion newly minted ONE tokens would have a value of approximately $3.2 million.

The large-scale token creation has therefore raised concerns over the security of the Harmony network. Moreover, the potential selling pressure created by the unauthorized supply increase has made traders dump their holdings created extra pressure on $ONE price.

Harmony Works to Freeze Funds and Assess Rollback Options

Harmony has confirmed that it is working with its team and relevant exchanges to identify, stop, and freeze these unauthorized tokens. The project is also developing a software patch while evaluating potential rollback options. However, Harmony has not yet disclosed the root cause of the suspected exploit. It has not even officially confirmed the exact number of ONE tokens involved.

The incident represents another security challenge for Harmony. The network previously experienced an approximately $100 million exploit involving its Horizon Bridge in 2022. In 2023, a separate staking-system bug resulted in the unintended creation of approximately 146 million ONE tokens. Considering the previous incidents, the latest exploit is smaller in numbers.