Taiko Layer-2 Network Suffers $1.7M Exploit Due to Exposed SGX Signing Key Taiko, an Ethereum layer-2 network using zero-knowledge rollups, confirmed a security breach in its chain state verification mechanism, prompting users to withdraw funds from all bridges on the platform. The incident, disclosed in a Sunday security notice, revealed that the protocol’s security assumptions for its bridges could no longer be trusted. While Taiko did not release details on the cause or losses, blockchain security firm BlockSec Phalcon estimated damages exceeding $1.7 million. The attack was traced to an exposed Raiko SGX enclave signing key, which was publicly accessible on GitHub. The compromised key allowed attackers to register malicious SGX instances, generate fraudulent proofs, and manipulate Taiko’s verification contracts. This enabled the theft of Ethereum-based assets from the protocol’s ERC20Vault via a forged bridge message. Taiko, co-founded by former Loopring CEO Daniel Wang, launched its mainnet in May 2024 as a scalable solution for Ethereum. The team is coordinating with its Security Council and partners to mitigate the breach, pausing affected systems and pursuing technical and legal responses. The incident follows a surge in DeFi exploits, including a $292 million theft from KelpDAO in April (linked to North Korea’s Lazarus Group) and a $1.34 million loss on Solana-based Raydium earlier this month. In total, DeFi protocols have lost over $840 million in the first five months of 2024.