Cardano News Today: Disgruntled Operator's AI-Powered Attack Splits Cardano Chain, Sparks Emergency Fix

Cardano (ADA) faced a significant disruption this week as a malformed transaction triggered a temporary chain split, prompting an emergency network upgrade and raising questions about the blockchain's resilience. The incident, described as a "premeditated attack" by co-founder Charles Hoskinson, exploited a software bug to create two competing chains - one "poisoned" and one "healthy" - before developers deployed a patched node update to restore consensus. The event caused a brief but notable 6% drop in ADA's price, extending its monthly decline to 42%.

The chain split occurred when a malformed delegation transaction, submitted by a user identified as "Homer J.", bypassed validation checks in newer node versions while older nodes rejected it. The transaction exploited a vulnerability in Cardano's ledger code, first flagged in 2022, which allowed an oversized hash to trigger a divergence in block validation. Block producers split into groups following either chain, leading to inconsistent states in decentralized finance (DeFi) protocols and staking rewards. Intersect confirmed no user funds were lost but noted that the split exposed weaknesses in the network's consensus mechanism.

Hoskinson characterized the incident as a targeted attack by a disgruntled stake-pool operator seeking to harm Cardano's reputation.

The attacker, who claimed to have acted alone and issued a public apology, admitted using AI-generated terminal commands to replicate the malformed transaction without realizing the scale of the disruption. "I'm ashamed of my carelessness," the user wrote, acknowledging the stress caused to the network.

The chain split prompted an immediate response from Cardano's ecosystem. Stake pool operators were instructed to upgrade to node versions 10.5.2 and 10.5.3 to rejoin the canonical chain. Exchanges and wallet providers temporarily paused deposits and withdrawals as a precaution, though retail wallets remained unaffected due to their reliance on components that ignored the malformed transaction. By Saturday, most services had resumed normal operations after the patch was applied.

Market reactions underscored the incident's impact. ADA's price fell below $0.40, with derivatives data revealing $91 million in short leverage compared to $11.5 million in long positions. Analysts noted that the broader crypto market's weakness, including a historic October flash crash, contributed to the decline. "No one noticed Cardano's network partition because nobody uses it," one user quipped, highlighting the platform's waning relevance.

Despite the technical resolution, lingering concerns persist. A post-mortem report from Intersect revealed the bug had remained undetected for years, masked by older ledger versions and standard transaction tools. Meanwhile, Solana co-founder Anatoly Yakovenko praised Cardano's consensus design, calling its response to the crisis a validation of its architecture.

The incident adds to a challenging year for Cardano, which has seen prolonged outflows and a breakdown of key technical support levels. While developers emphasize the network's swift recovery, the event underscores the fragility of decentralized systems under edge-case failures.