Ethereum layer-2 blockchain Linea is under fire after it revealed that it unilaterally stopped block production because Velocore, a decentralized exchange operating on its network, was hacked.
Over the weekend, 700 ETH—equivalent to over $2.6 million—was moved off the layer-2 network via an unnamed third-party bridge because of the Velocore hack. As of press time, a total of $6.8 million was lost from Volocore. Linea explained that its inability to reach the DEX team immediately prompted it to “halt the sequencer to prevent additional funds bridging out.”
It added:
“The sequencer was paused from block 5081800 and 5081801. During this pause, we gave the Velocore team time to support their efforts of triaging the vulnerability. We also censored the hacker’s addresses. This significantly reduced the ecosystem impact on Linea users.”
Linea justified its decision by pointing out that the hacker “was beginning to sell a large sum of tokens into ETH. This would have created other issues in the ecosystem for users beyond the liquidity pool-draining exploit.”
Community slams Linea
The crypto community has strongly criticized Linea’s decision to halt block production, arguing that it violated the ethics of the emerging industry.
While acknowledging the rationale behind the move, Mert Mumtaz, the CEO of Helius Labs and a vocal supporter of Solana, expressed apprehensions about its long-term impact. He said:
“Consensys’ L2 unilaterally turned off the chain yesterday Reasonable given the circumstances but also a clear sign that this is not crypto.”
Echoing this sentiment, Alex Gluchowski, CEO of Matter Labs, emphasized the critical importance of decentralization for all sequencers. He urged all layer-2 solutions to prioritize integrating decentralization into their platforms.
“Decentralizing the sequencer isn’t optional. Every serious L2 stack must race to do this first,” Gluchowski remarked.
Decentralization goals
Meanwhile, Linea said it remains committed to decentralizing its network and sequencer to prevent a recurrence of this event. It stated:
“Linea’s goal is to decentralize our network – including the sequencer. When our network matures to a decentralized, censorship-resistant environment, Linea’s team will no longer have the ability to halt block production and censor addresses – this is a primary goal of our network.”
The Consensys-backed blockchain also pointed out that most rival networks still rely on centralized technical operations to protect ecosystem participants. However, it added that its “core value (remains) a permissionless, censorship-resistant environment.”
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