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The Wormhole cross-chain bridging platform has captured the crypto community's attention with its colossal $850 million airdrop event. This event, tied to the launch of its native governance token, W, has not only drawn in a diverse crowd of crypto fans but has also unwittingly opened the gates to opportunists ranging from scammers to parody meme coin creators, all looking to capitalize on the hype surrounding the project. It is no wonder, then, that hacks, scams, and exploits drained $502,522,934 of value from Web3 platforms in Q1 of 2024.
Wormhole Airdrop Attracts Opportunists
The cross-chain bridging platform Wormhole has become the center of attention due to its massive $850 million airdrop event associated with the release of its native governance token, W. This airdrop did not only attract the attention of crypto enthusiasts but also opened the floodgates to a number of scammers, hackers, and creators of meme coins looking to exploit the hype.
Independent blockchain investigator ZachXBT pointed out on X that the official Wormhole announcement is flooded with scam accounts. These accounts, some even sporting convincing "gold checkmarks," attempted to mislead users with fraudulent offers. Even more concerning, the personal X account of Wormhole founder Robinson Burkey was also compromised, which led to the spread of malicious links suspected of draining crypto wallets. After the attack, Burkey's account was set to private.
The launch of the W token on Apr. 3 was a major milestone for Wormhole, with the token debuting at a price of $1.66 on the Solana-based decentralized exchange OpenBook. Unfortunately, the token's value has dropped quite a bit since its launch, dipping by 13.5% to trade at $1.19 at press time, according to data from CoinMarketCap.
A large portion of the token supply, amounting to about 674 million tokens, or 6.75% of the total, was earmarked for the airdrop. This allocation meant that the total value of the airdrop stood at $896 million for users who met the eligibility criteria laid out by the protocol. Initially available only on the Solana network, plans are in place to introduce the W token to the Ethereum network as an ERC-20 token, with future expansions to other layer-2 networks also in the pipeline.
Meanwhile, a parody meme coin named "warmhole" was created, which was launched in the wake of the Wormhole airdrop announcement. The Warmhole meme coin saw a meteoric rise from a market cap of approximately $100,000 at its inception to an astonishing $8.3 million, a 83,000% increase in less than six hours.
This unexpected success led to some humorous speculation among the community, with one user joking that immediate investors in Warmhole over the W tokens could have become billionaires.
Hacker's Airdrop Eligibility
Ironically, the Wormhole team found themselves in a very precarious situation when they discovered that the hacker responsible for a massive $321 million exploit in 2022 was initially eligible for a huge airdrop. The exploit was one of the largest in the crypto industry's history.
The discovery was made public through a post by Pland, a pseudonymous researcher on X, who revealed that several wallet addresses linked to the infamous hack were overlooked during the exclusion process for Wormhole’s airdrop. These findings were later corroborated by data from the Solana-based airdrop checker Airdrop.link. According to this data, four specific wallets connected to the exploit had the potential to claim 31,642 Wormhole (W) tokens, valued at around $50,000.
In response to this, the Wormhole team acted swiftly to rectify the oversight. All of the implicated wallet addresses were identified as part of the exploit by the Solana block explorer Solana.fm.
This incident happened as the Wormhole team was still trying to mitigate the fallout from the 2022 exploit. In February of 2023, a counter-exploit operation was successfully executed by Jump Crypto and the decentralized finance platform Oasis.app. This operation managed to recover $225 million in digital assets from the hacker and secure them in safe wallets.
Moreover, Wormhole's airdrop announcement can also be considered as one of the broader recovery efforts after the exploit.
Wormhole Trending
This whole situation has turned quite a few heads it seems. Three tokens have recently dominated the buzz on social media, according to Santiment. These tokens are associated with the Wormhole interoperability project, Ethena Labs' synthetic dollar protocol, and the Waves Protocol.
Wormhole recently finished its "Wormhole Token Generation Event" on Apr. 3. This milestone resulted in the distribution of 670 million Wormhole tokens (W) to 400,000 eligible wallets. Wormhole’s team described this event as crucial for its progression towards a permissionless ecosystem.
On the other hand, Ethena Labs has also been under the spotlight after its token launch on Apr. 2, which included an impressive $450 million airdrop. The launch saw its governance token, ENA, being distributed widely, with the largest recipient bagging 3.3 million ENA tokens, valued at $1.96 million at the time.
After the launch, ENA's price jumped, with the price crossing the $1 threshold, increasing the value of the largest ENA holder's assets to more than $3.4 million. The rapid listing of ENA on major cryptocurrency exchanges like Binance and KuCoin shortly after its launch also contributed to its rising prominence. At press time, ENA is worth $0.978 after its price was able to climb by 1.85% over the past day of trading, according to CoinMarketCap.
Meanwhile, the Waves Protocol's token, WAVES, experienced a sharp 12.36% decline in value to $2.98 over the past 24 hours. This downward trend has drawn a lot of trader attention, partly due to a proposal involving the investment of Neutrino (XTN) treasury funds into the WavesIndex pool, utilizing WAVES tokens from Neutrino reserves. Adding to the WAVES token's volatility was its addition to Binance's Monitoring Tags list, indicating potential delisting due to failing to meet the exchange's standards.
What is Wormhole and How Does it Work?
Wormhole has emerged as a pivotal player in the blockchain ecosystem, offering a cross-chain protocol that spans more than 30 blockchains and Layer 2 networks, including major smart contract chains like Ethereum, BNB Chain, Solana, Polygon, and Avalanche. Initially launched in 2020 as a bridging solution primarily for fund transfers between Solana and Ethereum, Wormhole has undergone significant evolution. By early 2022, it transitioned from the Wormhole Token Bridge into a more comprehensive Wormhole platform, focusing on lightweight messaging for cross-chain communications.
At its core, Wormhole facilitates seamless communication across different blockchain networks through a suite of products, including a cross-chain messaging protocol, an on-chain querying tool, the Portal token bridge, and solutions for interconnectivity with the Cosmos ecosystem and native-level token transfers. This diverse range of tools positions Wormhole as a one-stop shop for developers looking for cross-chain functionality.
The operational mechanism of Wormhole is intricate yet efficient. It utilizes core smart contracts deployed across all supported blockchains to enable cross-chain messaging. These contracts process data packets and produce Verified Action Approvals (VAAs), which are then verified and relayed by the decentralized Guardian network and VAA message Relayers. This off-chain segment ensures the accuracy and legitimacy of cross-chain communications, with Guardians playing a critical role in the verification process.
Despite its foundational role in facilitating cross-chain transactions, Wormhole operated without its own native crypto token until early 2024, when the launch of the W token was announced. The W token is designed to serve as a governance token, granting holders the ability to influence the development and strategic direction of the Wormhole protocol through the Wormhole DAO. This decentralized governance entity will initially oversee community and treasury activities, with plans to expand its role to include operational and technical decisions.
Issued on both Ethereum and Solana as ERC-20 and SPL tokens respectively, the W token has a maximum supply of 10 billion, with 18% of this supply constituting its initial circulating amount. The remaining tokens are scheduled for staged release over four years.
Soaring Crypto Hacks
Scams surrounding the Wormhole airdrop are not the only ones wreaking havoc on the crypto community. In the first quarter of 2024, the crypto and blockchain sector witnessed a concerning rise in security breaches, particularly with an alarming increase in losses due to compromised private keys.
Ronghui Gu, the co-founder of blockchain security firm CertiK, shared his insights on the evolving threat landscape. He pointed out a 1,171% surge in losses from private key compromises, totaling $239 million from 26 incidents. This is a stark increase from the mere $18.8 million recorded in the same time last year. Phishing attacks alone accounted for 83 incidents with $64 million in losses.
Despite these challenges, he is still optimistic about the crypto community's ability to improve its defenses. He advocated for the adoption of multisig wallets and multiparty computation to distribute authorization and minimize risks associated with single-point failures and unauthorized access.
Looking ahead, Gu anticipates that the trend of increasing security incidents may continue throughout the year, driven by the crypto market's upswing and the consequent rise in incentives for cybercriminals. He warned that the industry not only has to brace for ongoing threats but also to prepare for the emergence of new, innovative attack trends.
