Solana’s Wormhole Launch Triggers a Market Rally Amid Rug Pull Concerns

Solana’s Wormhole, a bi-directional communication bridge allowing existing Ethereum based projects to move their ERC20 tokens back and forth across blockchain built on Solana was recently launched to the much excitement of the Solana community.

The Solana-backed multi-blockchain connector aims to bring interoperability to the blockchain and crypto space even as the DeFi movement picks up speed. With Solana’s wormhole, an ethos of multichain connectivity will be established thus allowing projects from different blockchain networks to leverage Solana’s scalability and performance.

At the moment, Solana’s blockchain is capable of handling over 1,500 transactions per second at an average cost of only $0.00025. 

The excitement about the launch of Wormhole on Solana produces a price rally in the value of Solana’s native token SOL as the token’s price appreciated more than 75% on various markets. Other projects launched on the Solana blockchain picked up steam as well.

Solana’s price rally follows the fixed price action of top cryptocurrencies such as Bitcoin and Ethereum after a recovery which was a welcome reprieve given the months of weakness. Currently, Bitcoin’s recovery is edging closer to $50,000 and Ethereum is priced at about $3,300 per ETH.

Biggest Rug Pull Ever

However, a rug pull by Luna Yield (a liquidity farming project launched on Solana’s launchpad) has slowed down Solana’s two-week-long price rally as users grow cautious of losses. In the crypto and overall DeFi (decentralized finance) space, a rug pull is a blatant exit strategy by the creators of a project where the liquidity of that project is withdrawn in one malicious fell swoop attack. 

For Luna Yield’s case, reports emerged soon after the project’s website, Twitter, and Telegram channels were deleted. 

Launched by an anonymous team. Luna is a crypto-lending platform whose team allegedly withdrew over $8 million from investors’ funds in liquidity pools. Luna user’s who tried to unstack their funds were unsuccessful as the Luna Yield team who designed the liquidity pool’s smart contracts had already moved the funds from the pool.

Upon further investigations, some reports emerged showing that the user who approved the transfer of funds from Luna’s original liquidity pool has the following wallet address; “ivBMuQdExFYSQraWteitugJ5AixJF9AeVwgdCjQhGwM” funded the mint authorization of the LUNY token (Luna Yield’s native asset).

A Twitter account belonging to Solana’s launchpad team responded to the matter saying; 

“Luna Yield, the latest IDO on our Launchpad, seems to have some problems. The Luna Yield Team took down their website and all other social media. They also withdraw all liquidity. SolPAD still can’t reach Luna Yield Team to figure out what happened.”

Mitigating Risks

While the Solana launchpad team has tweeter that a “compensation plan for Luna Yield IDO participants” is underway, the incident highlights some of the inherent risks of the current DeFi ecosystem.

The rug pull by the anonymous creators of Luna Yield is reputedly one of the largest yet and a stern warning even as Solana competitors such as Cardano and Polkadot launch infrastructure that enable interoperability.

At the moment, experts warn that Cardano’s much anticipated Alonzo upgrade could bring about a mix of important projects as well as scam projects that initiate rug pulls. 

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