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Solana Developers Bifurcates Solana Liquidity Hub Serum after Hacking Incident on FTX

Written by James Smith

Serum, an open liquidity infrastructure known to be the most widely used liquidity hub in the Solana ecosystem, is now said to be forked after the fact that it may have been compromised due to the FTX hack.

A developer with a pseudonym, Mango Max, said on Twitter a “verified build of the same version has been made and deployed” on Nov 12. In addition, the upgrade authority and fee revenues have been changed and are now managed by a multi-sig controlled by a team of trusted developers. Serum (SRM) and MegaSerum (MSRM) tokens, and also fee discounts, were not altered and are now working as usual.

Given that FTX develops Serum, many Solana developers believe the hack may have affected the protocol. Anatoly Yakovenko, a developer of the Solana blockchain, stated that developers are racing to fork Serum’s code today and resume the protocol without the involvement of FTX. 

However, apparently, developers might have to require another version of Serum because the original can only be updated via a private key which is controlled by someone at FTX and not the Serum DAO. As a result of the FTX hack, that key may have been compromised. Yakovenko added, “Afaik, the devs that depend on serum are forking the program because the upgrade key to the current one is compromised.”  

Yakovenko is not the only developer who contributed to the forking matter. Mango Max said, “The serum program update key was not controlled by the SRM DAO but by a private key connected to FTX. At this moment, no one can confirm who controls this key and hence has the power to update the serum program, possibly deploying malicious code.”

Mango Max mentioned that he and some other developers have now decided to take matters into their hands and push for a “relaunch.” He also concluded that a few community projects, including Solape Finance, Open Serum, Jupiter Exchange, Switchboard, and Mango Markets, have announced that they are working to integrate with the fork.

While the plan to relaunch was happening, several Solana apps which depend on the Serum protocol began limiting their exposure. Jupiter, a widely used DEX aggregator exchange on Solana, informed users that it has turned off the use of Serum’s liquidity due to security concerns. Jupiter concluded by encouraging other integrators to do the same.

Other Solana-based applications, such as Mango Markets, Phantom, and Magic Eden, also announced they would stop depending on Serum for liquidity and have halted its use because of security concerns.

It’s no more news that the hack and bankruptcy of FTX caused so much damage in the industry, affecting other projects. Recently Galois Capital, a crypto hedge fund that deals in over-the-counter trading, disclosed that almost half of its capital is trapped in FTX.

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James Smith

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