Key Highlights
- Zano reset its network to block 3,833,000, wiping approximately 30 days of recorded transactions.
- A critical security flaw in the Gateway Addresses feature allowed unlimited minting of ZANO and Freedom Dollar tokens.
- Exchange MEXC halted all ZANO and FUSD transaction activity during the network migration process.
- Affected users will receive compensation from existing developer reserves and team wallets, with no new token creation planned.
- The token’s value declined over 12% within a 24-hour period as the network restoration took place.
The Zano network, a privacy-oriented layer-1 blockchain platform, has executed a major network reset following the discovery of a security vulnerability that permitted the creation of unauthorized tokens. The restoration process eliminated approximately 30 days of blockchain data.
Network operations resumed from block 3,833,000, positioned immediately before the implementation of Hard Fork 6, which deployed Gateway Addresses functionality last August.
Root Cause of the Network Reset
The Gateway Addresses functionality was designed to streamline integration for cryptocurrency exchanges, cross-chain bridges, and payment processors. This system provided these platforms with an account-based balance model rather than Zano’s traditional unspent transaction output tracking mechanism.
An exploitable weakness within this system enabled the unrestricted generation of both ZANO and Freedom Dollar tokens. According to the development team, this vulnerability undermined the blockchain’s foundational principle of maintaining a fixed token supply.
A comprehensive technical analysis detailing the precise mechanics of the exploit remains unpublished. The team confirmed that standard wallet security credentials and transaction confidentiality features remained intact throughout the incident.
Creating a Gateway Address required a 100 ZANO registration fee, which was permanently removed from circulation. Blockchain records indicate that at least two such addresses were created within the feature’s initial seven days of operation.
Network Restoration Process
The restoration procedure demands that mining operations, staking participants, node operators, trading platforms, and service providers deploy updated software and synchronize with the recovered blockchain. Version 2.2.3.600 was released to facilitate this transition.
Standard wallet users can upgrade their software without re-entering recovery seed phrases. Zano has begun restoring its internal infrastructure, including mobile wallet node services.
External platforms must implement updates according to their individual timelines. The project advised users to verify whether their chosen exchange or wallet provider has completed the migration before initiating fund transfers.
Trading platform MEXC temporarily disabled both deposit and withdrawal functions for ZANO and FUSD tokens while processing the migration. No specific timeline for service restoration had been provided at the time of reporting.
Quinten van Welzen, serving as Zano’s head of marketing and growth, clarified that the development team lacks authority to unilaterally enforce a rollback. Developers can only distribute software updates and request voluntary adoption from network participants.
He emphasized that major mining pool operators hold significant influence in such decisions. Expanding the network’s base of independent node operators would enhance overall network resilience, he noted.
All transactions executed during the affected timeframe will be absent from the restored blockchain. This encompasses both legitimate transfers and the improperly created tokens.
The rollback cannot reverse transactions already finalized on external blockchain networks. Assets converted to USDT, DAI, or other tokens on separate platforms remain beyond the scope of this restoration.
The project is collaborating with impacted parties to quantify damages. A structured compensation mechanism and formal claims procedure have not yet been announced.
Van Welzen specified that reimbursement funding will be sourced from the development treasury, team-controlled assets, and contributions from major token holders. He confirmed that no additional ZANO tokens will be minted to address losses.
Initial project communications referenced a more limited rollback while the full extent of the breach was still under investigation. Van Welzen later explained that those preliminary statements were issued before the team achieved complete understanding of the situation.
The ultimate rollback extended to approximately one month after investigators mapped the complete scope of the security breach.
Market Impact and Future Plans
ZANO was trading around $6.32 during the recovery operation, representing a decline of approximately 12.85% across a 24-hour measurement period, based on CoinMarketCap data. The project’s total market capitalization registered near $97.6 million.
The development team announced plans to release a detailed technical document examining the exploit’s cause and providing a comprehensive audit of associated code. No target date has been established for reactivating the Gateway Addresses feature.
The functionality will remain disabled pending completion of the security review process.
