GALA Project Responds: What Exactly Happened with $pGALA, and What Are the Risks of Decentralization?
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GALA Project Responds: What Exactly Happened with $pGALA, and What Are the Risks of Decentralization?
The massive $pGALA token minting has suddenly put pNetwork, Gala Games, and Huobi in the spotlight.
Navigating Web3 tides with focused insightsBy: Gala Games
The massive minting of $pGALA has suddenly placed pNetwork, Gala Games, and Huobi in the spotlight. Among them, Gala Games might be the most frustrated—they did nothing wrong but were cast as the "main character" in this incident. Welcome to the decentralized world, where something entirely unrelated to a token can severely impact other tokens. Let's take a look at Gala Games' latest article—how do they view this event, and what reflections do they have?
Full text below:
Wow, what a week! It started with the launch of Spider Tanks, ended in an unfortunate perfect storm of issues and FUD, and concluded with the release of GALA 2023 Vision. You can check out some highlights from Spider Tanks and the GALA 2023 videos below.
Now that the videos are over, let’s turn to the core issue around pGALA and pNetwork. This is our only official statement on the matter.
The entire story began in mid-2021 when a partner at a major exchange introduced us to the team behind pNetwork. They told us they would build a cross-chain bridge for GALA to help users move their ERC-20 GALA tokens from Ethereum to the BNB Chain. Given that this was part of the decentralized future, we couldn’t really stop them, so they went ahead and built the bridge. Ironically, the bridge itself isn’t the problem here. Although it had various vulnerabilities over the past few months, that’s not the focus of today’s discussion.
When Thomas Bertani of pNetwork contacted us on Thursday, he informed us that there was a vulnerability in the contract on the BNB Chain that hadn't yet been exploited. This vulnerability stemmed from a private key mistakenly left in the contract by pNetwork engineers, and that key had already been used to change the contract’s control address. According to Bertani, this vulnerability actually occurred 67 days ago but hadn't been maliciously exploited until now.
Essentially, the pGALA token contract on the BNB Chain was a ticking time bomb—one that could go off at any moment if a malicious actor decided to exploit it. Bertani believed that once the vulnerability became known, bad actors would likely act quickly, potentially minting an unlimited supply of pGALA through pNetwork’s pGALA contract.
Bertani proposed a plan to disable the bridge and then conduct a white-hat attack on their own smart contract. pNetwork asked us to contact exchanges and urge them to immediately suspend all deposits and withdrawals of pGALA. We reached out to every exchange we had connections with, explained the situation, and requested they pause deposits and withdrawals of BEP-20 pGALA. Most complied, but unfortunately, not everyone acted immediately. Additionally, since we typically don’t actively promote our GALA token, we haven’t established relationships with the majority of exchanges listing $GALA, let alone those supporting the BEP-20 $pGALA on BNB Chain. We also contacted PancakeSwap, asking them to place warning labels on trading pairs to discourage people from trading pGALA.
With this context, pNetwork proceeded with their plan—to drain liquidity from the old pGALA pools on the BNB Chain so that corresponding tokens could be returned to rightful holders once a new, secure contract was redeployed.
Unfortunately, in this scenario, many users (and likely many bots) attempted to arbitrage the price difference between pGALA on PancakeSwap and ERC-20 GALA on centralized exchanges. Some exchanges that hadn’t paused deposits ended up receiving large amounts of pGALA on the BNB Chain, affecting both themselves and other major players in the market.
Amid all this, there’s good news and bad news.
The good news: ERC-20 GALA was largely unaffected. Everything that happened is unrelated to any contracts managed, maintained, or deployed by Gala. Anyone holding ERC-20 GALA was completely insulated from the entire pNetwork incident. Furthermore, according to pNetwork, the GALA-to-pGALA bridge on their platform remains sound, and collateral is still intact.
Per their public statement, anyone who held pGALA before the white-hat operation began will receive new pGALA once the bridge resumes, which can then be bridged back to the Ethereum mainnet to retrieve the original GALA tokens.
The bad news: There are still a lot of pGALA tokens out there. This isn’t our token, but we’re deeply concerned about the community of pGALA holders. We’re currently exploring ways we can contribute to resolving the situation. This isn’t our token, nor is it our fault—but we want to act in the best interest of the community.
Decentralization can be scary—this incident shows how something completely unrelated to a token can severely impact other tokens. In this industry, we should all stand together.
Gala believes in a better future, and we’re working hard to build it—together with the community, every gamer, listener, and observer.
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