Major staking provider initiates precautionary validator exit after $40M Solana exploit exposes API vulnerabilities
Kiln Finance has begun an orderly withdrawal of 1.6 million Ethereum tokens worth approximately $693 million from its validator network, a precautionary security measure following a $40 million exploit that targeted SwissBorg’s Solana Earn program. The massive unstaking event has triggered a surge in Ethereum’s exit queue to over 2 million ETH, pushing withdrawal wait times to 43 days.
Security Response to SwissBorg Incident
The withdrawal decision stems from the September 8 hack of SwissBorg, which resulted in the theft of approximately 193,000 Solana tokens valued at $41 million. Hackers exploited a vulnerability in Kiln’s API infrastructure that provided staking services for SwissBorg’s Earn program.
“Following our announcement yesterday regarding the Solana incident involving SwissBorg, Kiln is taking additional precautionary measures to safeguard client assets across all the networks,” Kiln Finance stated in its official response.
CEO Laszlo Szabo defended the decision, calling the validator exit “the responsible step to protect stakers” while emphasizing that client assets remain secure throughout the process. The company has temporarily suspended certain services as it reinforces its infrastructure.
Extended Withdrawal Timeline and Market Impact
The validator exit process, which commenced on September 10, is expected to take between 10 to 42 days depending on individual validators, followed by up to nine additional days for withdrawals to complete. These delays are enforced by Ethereum‘s protocol and cannot be expedited.
The withdrawal represents roughly 4.5% of all staked Ethereum, with approximately 35.6 million ETH currently staked representing 29.4% of Ethereum’s circulating supply. The exit queue surge has reversed a recent trend where staking entries had briefly surpassed withdrawals for the first time since July.
Community Reassurance Amid Concerns
Ethereum educator Anthony Sassano moved quickly to address community concerns about potential market disruption, emphasizing that the massive unstaking event represents a security measure rather than a sign of network weakness.
“The withdrawn ETH will likely be restaked using new validator keys rather than sold,” Sassano explained, helping to calm fears about significant selling pressure on Ethereum markets.
Despite initial concerns, Ethereum has maintained relative stability, trading around $4,300 throughout the withdrawal announcement and implementation.
Looking Ahead
Kiln Finance has committed to publishing a comprehensive post-mortem report once its internal security review concludes. The company continues to work on reinforcing its infrastructure while managing the orderly withdrawal process.
The incident highlights the interconnected nature of decentralized finance protocols and the importance of robust security measures across multiple blockchain networks. As the withdrawal process unfolds over the coming weeks, market participants will be watching closely for any signs of broader market impact or additional security measures from other major staking providers.
Note: This article is based on the research content provided. For complete verification and additional source links, readers should consult official announcements from Kiln Finance.
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