Original title: GALA project speaks out: What exactly happened to $pGALA and what are the potential dangers of decentralization?
Written by: Gala Games
$pGALA's massive issuance has put pNetwork, Gala Games, and Huobi at the center of controversy. Gala Games may be the most upset. They did nothing wrong, but were treated as the "protagonist of the incident." This is the decentralized world. Something that has nothing to do with tokens may seriously affect other tokens. Let's take a look at Gala Games' latest article to see how they view this incident and what they feel.
The following is the full text:
Wow, what a week it was! Starting with the launch of Spider Tanks, ending with a perfect storm of unfortunate circumstances and FUD, and finally ending with the release of the GALA 2023 Vision. You can see some of the highlights in the Spider Tanks and GALA 2023 videos below.
As the video comes to an end, we move on to the core issues surrounding pGALA and pNetwork. This is our only official statement on the issue.
The whole story began in mid-2021, when a partner of a large exchange introduced us to the pNetwork project. pNetwork said they would build a cross-chain bridge for GALA to help users cross-chain GALA from the erc mainnet to the BNB chain. Given that this is the future of decentralization, we really can't stop them, so they started construction and built this cross-chain bridge. Ironically, this cross-chain bridge is not the problem here. Although this cross-chain bridge has been full of various vulnerabilities in the past few months, this is not the focus of our discussion today.
When Thomas Bertani of pNetwork contacted us on Thursday, he told us that the contract on the BNB chain was vulnerable but had not yet been exploited. The vulnerability was caused by a pNetwork engineer who mistakenly left a key in the contract, and this key had been used to change the control address of the contract. According to Bertani, the vulnerability actually occurred 67 days ago, but it had not yet been exploited maliciously. Essentially, the contract for the pGALA token on the BNB chain is a bomb that could explode at any time if a malicious actor decided to exploit the contract. Bertani believes that if the vulnerability is discovered, malicious actors are likely to take action and mint an unlimited amount of pGALA through pNetwork's pGALA contract.
Bertani presented us with a plan to deactivate the cross-chain bridge and then hack their own smart contracts via a white hat attack. pNetwork asked us to contact exchanges and remind them to immediately suspend all deposits and withdrawals of pGALA. We contacted all exchanges we had contacted and informed them of the situation, asking them to suspend BEP-20 pGALA deposits and withdrawals. Most did so, but unfortunately not all did so right away. In addition, since we generally do not try to promote our GALA token directly, we did not contact the vast majority of exchanges that listed $GALA, let alone the BEP-20 token $pGALA on the BNB chain. We also contacted PancakeSwap and asked them to put a warning sign on the trading pair to remind people not to trade it.
After learning about this, pNetwork formulated their plan to drain the liquidity pool of old pGALA tokens on the BNB chain so that the corresponding tokens could be returned to the previous holders when the new security contract was redeployed. Unfortunately, in this situation, many users (and probably many robots) tried to arbitrage the price difference between the pGALA price on PancakeSwap and the ERC-20 GALA price on exchanges. Some exchanges that did not stop deposits before this incident ended up receiving a large amount of pGALA on the BNB chain, which affected them and other major players in the market.
In all of this, there is good news and bad news.
The good news is that ERC-20 GALA was largely unaffected, and all of the events that occurred had nothing to do with the contracts managed, maintained, or deployed by Gala. Anyone holding ERC-20 GALA was not exposed to the entire pNetwork incident at all. In addition, according to pNetwork, the cross-chain bridge from GALA on pNetwork to pGALA is also sound and the collateral remains. According to their public statement, anyone who held pGALA before the white hat attack operation began will receive new pGALA after the bridge is restored, and can then cross-chain it to the Ethereum mainnet to obtain the original GALA token.
The bad news is there is still a lot of pGALA out there. It’s not our token, but we are sensitive to the concerns of the user community that holds pGALA. We are currently looking into how we can contribute to the space. It’s not our token, and it’s not our fault, but we want to act in the best interest of the community.
Decentralization can be a scary thing, and this incident shows that one thing that has nothing to do with a token can have a serious impact on other tokens. We should all stick together in this industry.
Gala believes in a better future and we are working hard to build it together with the community, with every gamer, listener and observer.