Lido Finance, Ethereum's largest liquid staking protocol, narrowly avoided a major security incident after one of its nine oracle keys was compromised. The breach, linked to validator operator Chorus One, resulted in minimal losses—just 1.46 ETH (~$4,200) stolen as gas fees. No user funds were affected, and no wider exploits were detected, according to joint statements from Lido and Chorus One.
Key Details of the Incident
- Compromised System: A leaked oracle key tied to a hot wallet used for reporting.
- Attack Impact: 1.46 ETH siphoned as gas fees; zero user fund losses.
- Detection: Low-balance alerts triggered investigations, revealing unauthorized access to a 2021-era Chorus One private key with outdated security standards.
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How Lido's Oracle Safeguards Work
Lido’s oracle system employs a 5-of-9 quorum mechanism to deliver Ethereum consensus data to its smart contracts. This design ensures resilience even if multiple keys are compromised:
- Multi-Signature Security: Requires consensus from 5+ oracle operators.
- Fail-Safe Protocols: Isolates breaches without disrupting operations.
Immediate Response and Mitigation
Lido’s team acted swiftly to contain the threat:
Emergency DAO Vote: Approved rotating the compromised key across three critical contracts:
- Accounting Oracle
- Validator Exit Bus Oracle
- CS Fee Oracle
- Enhanced Key Generation: New keys implemented stricter security controls.
Context: Unrelated Node Issues During Attack
Coinciding with the hack, several oracle operators faced unrelated technical challenges:
- Pectra Upgrade Bug: A minor Prysm error delayed oracle reports on May 10.
- Node Synchronization: Temporary disruptions resolved without affecting security.
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Post-Attack Updates
- Address Replacement: Compromised address (
0x140B) is being replaced by a secure new one (0x285f). - Governance Timeline: Chain vote passed, with a 48-hour objection period active as of Monday morning (Asia time).
FAQs
Q: Was user ETH staked via Lido at risk during the hack?
A: No. The breach only affected gas fees from a hot wallet; staked ETH remained fully secure.
Q: How does Lido’s oracle system prevent single points of failure?
A: The 5-of-9 quorum ensures attacks require compromising multiple keys simultaneously—making large-scale exploits highly unlikely.
Q: What changes is Lido making to prevent future incidents?
A: Beyond key rotation, the team now enforces uniform security standards for all keys, including legacy ones.
Q: Could this delay Ethereum’s Pectra upgrades?
A: Unlikely. The Prysm bug was minor and resolved quickly, with no impact on upgrade timelines.