Lido Confirms No User Funds Lost After Oracle Key Breach

Despite concerns sparked by the recent Lido oracle incident, the Ethereum-based liquid staking protocol has assured users that no user funds were compromised. In a statement, Lido noted that the breach was limited to one of its oracles' keys and that all other oracles were checked for signs of compromise. The team also confirmed that software integrity was checked and no signs of compromise were found.

For context, oracles play a crucial role in providing external data to blockchains, including price feeds, validator status, balances, and staking rewards. On May 10th, an attacker drained 1.46 Ethereum (ETH) from an outdated Lido oracle address from 2021, supported by Chorus One. This compromise could have led to false data and added vulnerabilities.

However, on May 11th, Lido stated in an X post that stakers were not affected. "Stakers are not affected. The protocol remains secure and fully operational. The oracle system is robust by design, with a 5/9 quorum, and all other participants remain safe," the team assured.

Lido has 9 oracle operators to ensure reliability, as they operate based on a quorum. Since only one oracle was compromised, the team confirmed that the rest of the system would function smoothly as they conduct further incident assessment. However, Lido's strategic advisor, Hasu, clarified that the Lido protocol fund can't be stolen through oracles.

"The oracle is not a multisig, it can't steal funds from the protocol, only trigger stETH to rebase a very small amount into either direction. And even that requires 5/9 signers, not 1/9," Hasu explained.

The Impact on LDO Token

Market participants appeared cautious with the native token's LDO after the oracle hack. According to Santiment, the weighted sentiment (red) dropped sharply into negative territory after the update. Despite this, Social Volume (market interest) was still elevated.

Simply put, LDO recovery could extend if the hack incident remains limited, as the team stated. The price of LDO has already shown signs of resilience, reclaiming $1 from the current trading zone and moving into the $1.4-$1.5 zone in past rallies. If this trend continues, the next target would be the overhead supply zone at $1.5.

Market Analysis

The price front has shown a +50% rally last week, with LDO reclaiming its critical leaderboard position. However, if the market loses confidence in the protocol's security measures, the altcoin could face challenges. A breach below $1 could embolden sellers to drag the asset down to the 50-Exponential Moving Average (EMA).

Bitcoin Analysis

In contrast, Bitcoin remains undervalued, but profit-taking has begun. This metric suggests that government control could spark the rise of 'dark stablecoins'.

The ultimate test for BTC's 'safe-haven' use case will be its ability to withstand potential regulatory challenges. As Bitcoin nears $105K, it is essential to assess whether BTC will cross a new all-time high or if concerns about tariffs will hinder its growth.

Altcoin Season

Certainty looms over the altcoin market as concern builds around the impact of government control on decentralized finance (DeFi) platforms. However, some analysts believe that altcoin season is making a comeback. THESE signals suggest that Bitcoin's dominance could be challenged in the near future.