Core DAO Faces Validator Reward Exploit, Plans Emergency Hard Fork

Core DAO is taking decisive action after a small group of validators exploited a flaw in the reward distribution mechanism, resulting in excess block rewards being issued beyond the protocol's intended limits. The organization confirmed the incident and has labeled the validators' actions as malicious.

To address the situation, Core DAO is coordinating an emergency hard fork aimed at patching the vulnerability in its reward distribution system. This upgrade will be forward-only, meaning no past transactions will be reversed, and the network's existing state will remain intact. The organization emphasized that user assets, network security, and custody systems are unaffected by the exploit.

As a precautionary measure, several exchanges have reacted to the incident. Coinbase paused CORE sends and receives on August 31, while LBank suspended CORE deposits entirely, citing project requirements. The core concern revolves around the potential oversupply of CORE tokens, which has a hard cap of 2.1 billion tokens, with approximately 40% allocated to node mining rewards over an 81-year schedule.

The exact volume of excess tokens minted during the exploit remains unclear, leaving traders uncertain about the token's actual supply dynamics. Core DAO is expected to publish a full accounting of the excess tokens in the postmortem investigation, which will be crucial for assessing the impact on the project's tokenomics.

For CORE holders, the focus will be on the outcome of the hard fork and the postmortem findings. A smooth execution of the upgrade could demonstrate operational competence, while a significant number of excess tokens could undermine the project's value proposition.