Lido Finance, the largest Ethereum-based staking-focused altcoin platform, reported that 11 node operators experienced outages. Network issues come after the Shapella upgrade implemented on April 12.
Lido Finance crashed while applying Shapella upgrade
Lido Finance, one of the biggest players in the Ethereum ecosystem, recently announced that it has upgraded its system by implementing the Shapella upgrade. However, a minor glitch occurred and caused a validator in the Lido Finance system to be “hacked”. This event, which occurred on April 14, 2023, has raised concerns among stakeholders and observers of the ecosystem.
The Lido team quickly identified the cause of the problem and took action to rectify the situation. In a tweet, the team announced that there were 11 ongoing interrupt events involving the RockLogic GmbH node operator. The team reassured stakeholders that they are investigating the issue and that the situation is under control.
According to the developer, the total estimated impact of the outage was around 20 ETH, which is around 3% of average daily protocol rewards or 0.0004% of TVL. Lido DAO has a fund of approximately 6,000 stETH to mitigate the impact on shareholders, in anticipation of such events.
The team also stated that if the outage was caused by human error, all damages will be covered by RockLogic GmbH. As of now, the total amount of penalties is 11.19 ETH, and the total penalty is expected to increase to 12.09 ETH as the truncated validators leak to the exit. On the other hand, the missed rewards are expected to rise to 0.31 ETH and 1.75 ETH for a total estimated effect of 13.84 ETH.
How did the altcoin price react to the news of the outage?
LDO price is following the day’s Ethereum rally despite the outage suffered by node operators. Its price is currently trading at $2.56, up 8% on the day.
Meanwhile, LDO’s 4-hour chart revealed the possibility of a continued price increase. Lido’s revenue and TVL rose, while most metrics remained in favor of the bulls. But a Lookonchain tweet pointed to another LDO sale that seems alarming for the token as it could further lower the price of the LDO.
According to the tweet, Dragonfly Capital transferred $1.5 million in LDO on April 12, which could increase the selling pressure. In this case, however, the situation ended differently. LDO is currently pricing the recently implemented upgrade upwards.
What’s next?
The incident highlights the need for greater care when implementing system upgrades, especially in a complex and rapidly evolving ecosystem like Ethereum. It is recommended that stakeholders and participants in the ecosystem be vigilant and take all necessary measures to prevent similar incidents from occurring in the future.
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