The Cardano network experienced a temporary chain split on Friday, an incident triggered by a "malformed" delegation transaction. Transactions designed to delegate ADA (ADA) to a staking pool are valid at the protocol level, but in this instance, they caused code malfunctions that impacted network functionality.
This "malformed" transaction exploited an older code bug within the underlying software library utilized by the Cardano blockchain. According to an incident report from Cardano ecosystem organization Intersect, this led to a network partition due to a disagreement among nodes on how to process the transaction.
Staking pool operators were subsequently instructed to download the latest version of the node software to resolve the issue and reconstitute the split chain into a single, unified blockchain history.
Despite the resolution, the split has raised concerns among users regarding orphaned transactions and the potential for ADA double-spends, which have reportedly caused economic damage to some individuals.
The exploit was attributed to an ADA staking pool operator known as Homer J. This operator reportedly used AI-generated code to submit the transaction and has since acknowledged responsibility for causing the network partition.
The temporary chain split ignited a discussion within the Cardano community. Some participants argued that Homer J's actions served to highlight critical bugs within the system. In contrast, Cardano founder Charles Hoskinson characterized the event as an attack on the Cardano network.
Investigation and Market Reaction
Cardano founder Charles Hoskinson confirmed that the US Federal Bureau of Investigation (FBI) has been contacted and is investigating the incident. In a separate video statement, Hoskinson elaborated on the severity of such actions, stating:
“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. Maybe it's shits and giggles, and they think it's just fun and games — ‘oh, look, we kicked Charles's toy.’ But these things impact the lives, money, and commerce of millions of people. It's like trying to shut down an economy and conduct a cyberattack on a nation-state.”
Typically, chain splits or any network disruptions are considered significant events for blockchain protocols, often leading to negative impacts on the price of their native tokens.
However, the price of ADA experienced only modest declines during and after the incident. It dropped from approximately $0.44 on Friday to around $0.40 at the time of this report.
This relatively small price movement occurred amidst a broader downturn in the cryptocurrency market, which began in October. That period saw a historic flash crash that resulted in a $20 billion cascade of crypto liquidations, marking the largest single-day liquidation event in crypto history.
In response to Friday's incident, one user commented that Cardano's network partition went unnoticed, stating, "No one noticed Cardano’s network partition, because nobody uses it."