THORChain Halts Trading on 10 Blockchains After Ethereum Reorg Causes 10 ETH Overpayment

TLDR:

• An Ethereum one-block reorg on October 31 caused THORChain to pay out 10 ETH it never received.
• The solvency checker halted ETH swaps automatically, and nodes then paused signing within two minutes.
• The user returned the 10 ETH, and the vault is solvent again after the shortfall was covered.
• Trading stays active on AVAX, BASE, RUNE, and XRPL, while ten other chains remain halted for now.

THORChain halts trading on several blockchains after an Ethereum block reorg. The reorg led the protocol to pay out 10 ETH that a vault never received.

The automatic solvency checker detected the shortfall on October 31 and stopped ETH swaps. Node operators then paused all chains as a precaution.

The user has since returned the 10 ETH, and the vault is solvent again. Nodes will re-enable each chain once they deem it safe.

How the Ethereum Reorg Caused the Overpayment

THORChain described the cause of the halt in a post on X. The team wrote that the reorg “caused THORChain to pay out 10 ETH that a vault never received.” The reorg took place at 11:34 UTC on October 31. It lasted only one block. The post also listed the next steps.

A 10 ETH deposit to one vault sat in the dropped block. That deposit never landed on the canonical chain. THORChain had already observed and credited it.

Therefore, the protocol treated the funds as received. That timing created a mismatch between the ledger and the vault.

The swap tied to that deposit missed its price limit. The protocol therefore issued a refund. As a result, the vault paid out 10 ETH it never received. The sender’s real deposit was refunded as well.

Every node detected the reorg. However, the re-check meant to remove the deposit could not get a clear answer in time. The system then finalized the deposit. Because of this, the vault carried a 10 ETH shortfall.

Emergency Halts and Current Chain Status

The solvency checker caught the shortfall and halted ETH swapping automatically. Within approximately two minutes, node operators halted ETH transaction signing. Consequently, no further ETH could leave the vaults. Three node votes then halted all ETH outbound payments.

Three more node votes halted all chains as a precaution. This step gave core developers time to investigate. The user later returned the 10 ETH, so the vault became solvent again. THORChain also explained how emergency halts work.

Three node votes can trigger a halt to protect network solvency. Four counter votes can reverse it, and five votes can reverse that reversal. According to the team, “halting a chain does not give those nodes control of the assets.”

A further concern remains now that the incident is public. During a reorg on an external chain, a malicious actor could submit a transaction with the same nonce. The vaults would then pay that actor funds. Core developers have been working on the necessary fixes.

Nodes will decide when to re-enable each chain once they deem it safe. Trading remains active on AVAX, BASE, RUNE, and XRPL.

Halted chains include ATOM, BCH, BSC, BTC, DOGE, ETH, LTC, SOL, TRON, and ZEC. Meanwhile, THORChain halts trading on these networks until the fixes are complete.

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