The Cardano network encountered a temporary chain split on Friday due to a “malformed” delegation transaction related to ADA interactions with a staking pool. Despite the split, ADA held its value moderately well, reflecting confidence in the network’s fundamentals.

This issue arose from an outdated code bug within the software library that governs the Cardano blockchain, which resulted in a network partition. According to a report from the Cardano organization Intersect, this was a result of how nodes managed the transaction.

Staking pool operators were advised to update their software to resolve the issue and unify the split blockchain history. However, this incident raised alarms over potential orphaned transactions and double-spend risks, causing slight economic distress among some users.

Source: Homer J Figure: Response from an ADA staking pool operator who utilized AI-generated code, Homer J publically acknowledged responsibility for the transaction causing the network split.

Discussions sparked within the Cardano community saw varied opinions, with some believing Homer J’s actions highlighted key vulnerabilities, while others, including Charles Hoskinson, the founder of Cardano, viewed it as an attack on the network.

FBI Inquiry Commences

The FBI is involved in the investigation of this event, as reported by Hoskinson. In a video update, Hoskinson stated:

“This kicked a hornet’s nest, and in many jurisdictions, this is a felony — a very serious one. It’s tampering with and damaging a digital network…”
Hoskinson emphasized the seriousness of the situation, comparing it to cyberattacks on nation-states.

Despite these challenges, ADA’s market performance was only mildly affected, with prices dipping slightly from $0.44 to around $0.40 amidst broader sector declines attributed to market volatility that peaked earlier in October.

Source: TradingView A modest decline in ADA’s price compared to significant market changes during the crisis.