Taiko reopens bridge after $1.7M exploit, says users made whole

Taiko restored bridge transfers after replenishing asset backing and completing security fixes following an 11-day network disruption.

Ethereum layer-2 blockchain Taiko reopened its bridge and restored full operations after a June exploit drained up to $1.7 million. 

On Thursday, Taiko announced that users could once again move funds to and from the network after completing the final stage of its four-step recovery plan. The project said it had made all affected users whole and that any remaining withdrawal limits are temporary safeguards that do not affect normal usage. 

The reopening ends an 11-day disruption following the implementation of security fixes and the restoration of the bridge's 1:1 backing.

The exploit occurred on June 21 after an attacker compromised Taiko’s chain-state verification mechanism, allowing forged proofs to be accepted and enabling unauthorized withdrawals from its Ethereum vault. Blockchain security companies said that up to $1.7 million in crypto assets were taken. 

Taiko’s seven-day token chart. Source: CoinGecko

Its token, TAIKO, briefly surged to about $0.35 following the bridge reopening, before retreating to roughly $0.14.

Taiko outlined its recovery plan on Sunday, saying it would bring the network back through four stages. The project said it had deployed fixes and verified that the chain's finalized state contained no forged checkpoints or attacker claims that could still be executed. 

According to Taiko, the changes were submitted through its security council and reviewed by independent security experts. The network then replenished the bridge to ensure that assets issued on the network were backed 1:1 by assets held on Ethereum. 

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Taiko also introduced conservative withdrawal quotas as an added precaution, saying the limits were not expected to prevent users from carrying out bridge transactions. However, it did not disclose the size of the quotas. 

Taiko has not disclosed how the bridge's 1:1 backing was restored or whether any of the stolen assets were recovered. The project said it would publish a full postmortem detailing the incident and its response.