Metis Not Accepting Purchases From BNB Chain Days After PolyNetwork Hack

Metis, an Ethereum layer-2 platform, warns users not to buy METIS on the BNB Blockchain days after the PolyNetwork was hacked and $5.5 million of assets stolen. In a tweet shared on July 5, Metis said they took a snapshot of all addresses holding METIS on the BNB Chain at the time of the PolyNetwork hack and when exploiters began selling stolen METIS. 

Because of this, the layer-2 protocol said all addresses that seek to buy METIS from the BNB Chain wouldn’t be recognized. At the same time, they are asking community members to pull liquidity from PancakeSwap, a popular decentralized exchange on the BNB Chain.

Already, Metis said all METIS minted via the PolyNetwork bridge had been locked on BNB Chain by the PolyNetwork team and had limited liquidity.

The PolyNetwork Hack And Impact On Metis

On July 2, the PolyNetwork, a cross-chain protocol that enables the transfer of tokens between various blockchains, including Ethereum, BNB Chain, Avalanche, and others, was hacked, and $5.5 million worth of assets stolen. The hacker exploited a protocol weakness to create billions of dollars worth of METIS, BNB, and BUSD tokens on the Metis platform.

Through this flaw, the hacker minted tokens out of thin air and transferred them to external addresses. A few hours after the hack was flagged, Binance CEO, Changpeng Zhao, said they weren’t accepting deposits from the PolyNetwork.

The hacker attempted to mint extra tokens from other blockchains besides Metis. However, the hacker couldn’t proceed with their actions because of insufficient liquidity. At one point, observers note, the hacker held $42 billion worth of tokens but couldn’t pull out all assets because of thin liquidity in some platforms. 57 assets on ten platforms, including Ethereum, BNB Chain, and Metis, were affected. 

Slow Response?

Still, analysts blame PolyNetwork for losing assets, claiming that their “slow” response cost token holders millions of dollars. Specifically, a team of web3 security experts claims PolyNetwork waited seven hours before pausing the protocol.

At the same time, they noted that the hack wasn’t “complex” since PolyNetwork’s logic wasn’t exploited. Instead, their analysis reveals that the protocol used a “simple 3 of 4 multisig arrangement over two years.” 

As a mitigation measure, the PolyNetwork team has suspended the bridge. It is also offering $10 million for anyone leading to the arrest of the hacker. In a tweet, they urged the community to “remain calm and trust” them as they are “committed to safeguarding their assets.”

When writing, METIS, the native token of the Metis platform, remains under pressure and edging lower, tracking toward January 2023 lows. At spot rates, METIS is down 60% from April 2023 highs.

Feature image from Canva, chart from TradingView