Gala Games Recovers Funds After Major Hack
Gala Games (GALA) has successfully recovered its funds following a significant hacking incident, marking a crucial moment in the ongoing story of crypto security. This comprehensive article delves into the details of the exploit, the subsequent recovery, and the impact on Gala Games and its native token, GALA.
Table of Contents
Understanding the Hack: A Closer Look
In a recent unauthorized minting exploit, a hacker created 5 billion new GALA tokens, which were then converted to ETH. This unprecedented breach highlighted vulnerabilities in Gala Games’ internal systems. The hacker managed to return the ETH, leaving Gala Games with additional unauthorized tokens.
The Financial Impact
After the hacker decided to return the funds, Gala Games received 5,913 ETH, valued at more than $22 million following a recent price rally. Despite this windfall, Gala Games is determined to defend its native token by using the recovered ETH to purchase the assets. Additionally, Gala Games plans to refund all affected users and vote on a proposition to burn the 5 billion unauthorized tokens, thereby restoring the original supply of GALA.
The Significance of the Additional Tokens
GALA’s supply stands at 35 billion tokens, making an additional mint of this size significant. The unauthorized tokens were traded through the native exchange, Gala Swap. However, the hacker only managed to swap around 600,000 GALA tokens before the rest were blacklisted.
The Impact on GALA Tokens and the Market Reaction
Dealing with an ethical hacker proved beneficial for GALA’s price. The token rose by approximately 10% overnight to trade at $0.046. This low-volume rally also lifted GALA by 15% for the week. GALA has been relatively stable, focusing on its ecosystem, games, nodes, and musical products. However, GALA has not seen a significant breakout since late 2021, when the asset peaked close to $0.80.
Gala Games’ Strategic Measures and Community Response
Gala Games is one of the biggest play-to-earn and Web3 projects, aiming for sustainability and long-term development. For this reason, GALA remains a stagnant token with limited GameFi exposure. GALA is crucial for staking and running the various nodes of the Gala Games ecosystem.
Immediate Actions Taken by Gala Games
The nature of the hack remains uncertain, though it involved minting GALA worth $200 million. Gala Games intercepted the large transaction, which created tokens on the Ethereum network. The hacker swapped only around $21 million worth of GALA before the project blacklisted the unauthorized wallet.
Enhancing Security Measures
Gala Games has installed updates to control its smart contracts and avoid unauthorized token generation events. The latest exploit is the biggest one for Gala Games. Gala Chain, the project’s native network, remains secure and has not been compromised.
Leadership and Vision: Eric Schiermeyer’s Role
Eric Schiermeyer, the CEO of Gala Games, confirmed that the GALA token contract on the Ethereum blockchain is not compromised. He hinted at internal controls that may have allowed the exploit. This breach happened just days after Gala Games launched its V2 token, which the team now controls better, including transfers, minting, and burns.
Transition to GALA V2 Tokens
The recent exploit generated 5 billion GALA V2 tokens. Gala Games swapped its token about a year ago, installing controls that allowed the project to blocklist the hacker’s wallet. GALA V1 tokens are still available for swapping through the Coinbase wallet, though they have been delisted from the exchange itself. Interestingly, GALA V1 is trading at a premium price of $0.08, with no real utility in the gaming ecosystem.
Market Dynamics of GALA V1 Tokens
The token’s old smart contract is still active, and GALA V1 tokens are traded on SushiSwap or sent to decentralized protocols. To be swapped for V2, all GALA tokens had to be manually removed from pools, staking, and DeFi protocols. The swap was inconvenient for some users, and the tokens are still active.
Community and Leadership Changes
A year after the swap, Coinbase has not mentioned plans to relist Gala Games with the new token version. Meanwhile, after four years at Gala Games, its president of blockchain, Jason Brink (aka BitBender), has posted an official statement with his resignation, albeit to become an unpaid advisor. A few other team members are also leaving the company.
Ethical Hacker’s Return and Gala Games’ Response
In a surprising twist, Gala Games has managed to regain a large chunk of the funds lost in the hack. The person behind the breach, which resulted in the loss of nearly 5,950 ETH (valued at around $22.75 million), returned to the scene, initiating a process of refunding. This follows a troubling security breach that initially caused losses of approximately $200 million in GALA tokens.
Exploiting the Loophole: How the Hack Unfolded
Exploiting a loophole in Gala Games’ internal systems, the attacker created 5 billion GALA tokens seemingly out of nowhere. Taking advantage of this newfound wealth, they quickly sold 600 million tokens on decentralized exchanges, netting roughly 6,000 ETH, equivalent to an astounding $21 million USD.
Gala Games’ CEO Takes Charge
Amidst the chaos, Gala Games’ CEO, Eric Schiermeyer, emerged as a beacon of hope for the community. Confirming the return of funds in the Gala Games Discord server, Schiermeyer outlined a visionary strategy called the “buy and burn” model. This innovative plan involves using the refunded ETH to buy GALA tokens and then removing them from circulation to stabilize the token’s value.
The Role of DWF Labs
Subsequently, Gala investor DWF Labs stepped in to buy 28 million GALA tokens to reduce the extent of selling in the market. This helped the token recover toward $0.045, albeit less than that observed before the hack incident.
Voting for Stability
Acknowledging concerns about Gala Games’ daily distribution practices, the project empowered its community through a node vote to determine the way forward. This transparent approach underscores Gala’s commitment to its stakeholders and its open business philosophy.
Immediate Actions: Freezing the Hacker’s Addresses
Gala Games immediately froze the hacker’s addresses, intercepting the large transaction that created tokens on the Ethereum network. The hacker swapped only around $21 million worth of GALA before the project blacklisted the unauthorized wallet. Gala Games has installed updates to control its smart contracts and avoid unauthorized token generation events.
Strengthening Security Protocols
Gala Games has taken significant steps to enhance its security protocols. The latest exploit is the biggest one for Gala Games. Gala Chain, the project’s native network, remains secure and has not been compromised. Eric Schiermeyer, the CEO of Gala Games, also pointed out that the GALA token contract on the Ethereum blockchain is not compromised and hinted at internal controls that may have allowed the exploit.
The Role of Gala Games’ Community
The recent hack happened just days after Gala Games launched its V2 token, which the team now controls better, including transfers, minting, and burns. This incident has prompted Gala Games to prioritize community engagement and transparency.
Future Prospects: Long-Term Development and Sustainability
Gala Games is committed to long-term development and sustainability. As one of the biggest play-to-earn and Web3 projects, Gala Games aims to remain a significant player in the blockchain space. The project focuses on its ecosystem, games, nodes, and musical products, with GALA playing a crucial role in staking and running various nodes.
Conclusion
The recent hack and subsequent recovery highlight the resilience and strategic foresight of Gala Games. Despite the breach, the company’s swift response and innovative solutions have helped regain a significant portion of the lost funds. The commitment to transparency, community engagement, and long-term sustainability positions Gala Games as a formidable force in the blockchain and gaming sectors. As the project continues to evolve, the focus will remain on enhancing security, refining its ecosystem, and ensuring the stability and growth of its native token, GALA. Through collaborative efforts and a steadfast commitment to its vision, Gala Games is well-equipped to navigate the challenges and opportunities of the dynamic crypto landscape.
