Degen Rollup Key Issue Forces Possible Chain Restart

Key Points:

• The Degen Rollup Key Issue involves Conduit holding Degen’s private key, which leads to downtime and user losses.
• Conduit’s role in the Degen Rollup Key Issue raises questions about accountability and security in DeFi.

Degen Rollup Key Issue: Conduit seized Degen’s L3 private key, causing 54 hours of downtime and $160k in user fund losses. Degen may need to restart or fork a new chain.

Conduit’s Role in Degen Rollup Key Issue and Downtime

Conduit had seized Degen’s L3 rollup private key sent shockwaves, retaining the key for several months, with a likelihood of Degen restoring or forking its chain. An error on one of the upgrades pushed by Conduit resulted in 54 hours of downtime that saw users lose $160k. Conduit has not taken any responsibility, and Degen is considering options.

Complicating matters, Conduit just recently closed a $7 million financing round led by Paradigm through the controversy. The financing will be used to further develop Conduit’s rollup-building technology. However, Degen’s experience raises questions about dependability and accountability in the fast-evolving DeFi landscape, whereby good operational practices are assumed to be leading drivers of winning users’ confidence, according to Degen.

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