Flow Blockchain is facing significant scrutiny following its controversial decision to rollback the network’s transaction history to address a $3.9 million exploit. This move, intended to restore the network to a state before the incident, has sparked a wave of reactions from key stakeholders, particularly due to a lack of coordination with ecosystem partners.
The Flow Blockchain intends to restart operations after rolling back to a checkpoint prior to the exploit, which occurred late on a Friday. However, this unilateral decision has drawn criticism, especially from cross-chain bridge operators who claim they were not consulted beforehand.
Rollback Plan Faces Backlash
Alex Smirnov, co-founder of deBridge, a major bridge provider for Flow Blockchain, expressed discontent on X, stating his team was not informed of the rollback in advance. “The Flow team decided on a rollback without consulting us, posing significant risk,” he noted.
Although the Flow team eventually reached out to deBridge after public criticism, they remained committed to the rollback strategy. Smirnov questioned the efficacy of this approach since the attacker had already transferred funds off the Flow network.
Rollback vs. Hard Fork Debate
Smirnov argued that the rollback would unfairly impact honest users and partners. “A rollback punishes innocent parties instead of the attacker, amplifying damage across the ecosystem,” he explained.
In contrast, Smirnov and LayerZero, another cross-chain protocol, advocate for a hard fork. This alternative would address the vulnerability without reversing the entire ledger, similar to BNB Chain’s past strategy.
“A targeted hard fork is the only viable solution for addressing such vulnerabilities,” Smirnov emphasized, highlighting that deBridge’s non-custodial design shields it from financial exposure but not from broader ecosystem risks.
Coordination and Communication Concerns
Smirnov highlighted a lack of communication with major exchanges trading FLOW. This gap raises uncertainty about handling deposits and withdrawals during the rollback window, potentially exposing exchanges to losses.
To mitigate risks, deBridge urges Flow to establish a collaborative “war room” involving bridges, asset custodians, and security groups to chart a more coordinated path forward.
The Flow Foundation acknowledged this coordination issue and extended the synchronization window to prevent data inconsistencies and service interruptions.
Market Impact and Future Steps
The exploit, confirmed by the Flow Foundation on December 27, involved a vulnerability in the execution layer, allowing the attacker to mint tokens. Following the disclosure, the FLOW token’s value plummeted over 40%, stabilizing around $0.11.
Exchanges like Upbit, Bithumb, and Coinone suspended transactions, and the Digital Asset Exchange Alliance issued a risk warning. The Flow Foundation promised a technical post-mortem within 72 hours, but missed an update deadline, leaving the community in suspense.
As the Flow Blockchain navigates this crisis, the debate between rollback and hard fork continues, with ecosystem stakeholders advocating for solutions that minimize harm and strengthen network integrity.
