KEY TAKEAWAYS
- The Flow Network executed two on-chain burns in January to eliminate counterfeit FLOW tokens following a security incident.
- The Community Governance Council completed the destruction of counterfeit assets, ensuring network integrity.
- Approximately 50 million counterfeit FLOW tokens were mixed with valid tokens on DEXes, prompting plans for further token destruction.
As part of its remediation efforts following a security incident on December 27, the Flow Network executed two on-chain burns in January to permanently remove counterfeit FLOW tokens. This action was part of an isolated recovery plan aimed at tracing, reclaiming, and destroying counterfeit assets without affecting the legitimate network history. Details of the security incident and the recovery plan were first announced in the Technical Post Mortem.
The Community Governance Council executed the destruction of counterfeit assets on-chain, completing the final mechanical step of the recovery plan. The network has been operating normally since validators deployed a security patch within 24 hours of the incident, with additional safeguards now implemented across the protocol.
Details of the Token Burns
On January 6, a total of 484,434,923.21 FLOW tokens were burned. The initially recovered counterfeit FLOW was isolated and permanently destroyed. The transaction details can be found under FLOW Transaction ID: 88782f3fa88ff1054b9047c007bf3e3ffbaa015eceb3f32c472c4ec595ead215.
On January 30, an additional 87,426,151,401.99 FLOW tokens were seized and destroyed. This action also included the destruction of counterfeit wETH and wBTC assets. The relevant transaction IDs are as follows: FLOW Transaction ID: 371dd2cf89f76e21c7e4b0c45cafc49f6181e22aec1b2569bf773f66b74ff5ef, wETH Transaction ID: d6c36b3ffeec306e4526170a3b9d5816d92f0aeafbcef77500b578f50457949e, and wBTC Transaction ID: 5bc64e197e0fc68284613180aec7eae752b4c3e45bbbfaee12186fb63bd1396d.
Addressing the Imbalance
Approximately 50 million counterfeit FLOW tokens were mixed with valid tokens when the attacker traded FLOW onto decentralized exchanges (DEXes). Due to the nature of DEXes, distinguishing between valid and invalid tokens in this context is impossible. To address this imbalance, the Flow Foundation plans to acquire approximately 50 million tokens from the general supply and permanently destroy them. The transaction related to this destruction will be added to the article once completed.
Why This Matters: Impact, Industry Trends & Expert Insights
The Flow Network executed two on-chain burns in January to remove counterfeit FLOW tokens following a security incident, marking a significant step in their recovery plan.
Recent industry reports indicate a growing trend towards token scarcity mechanisms such as burns and buybacks, which are becoming essential for enhancing long-term value in cryptocurrency projects. This aligns with Flow’s actions to reduce the total supply by over 5% and demonstrates resilience in the network’s recovery.
A MEXC report highlights that the burn of counterfeit FLOW tokens not only restored network operations but also rebuilt user trust. This supports the network’s focus on growth and stability following the security breach.
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