Earlier this week, in an extraordinary turn of events, 1 Syscoin [SYS] was sold for 96 Bitcoin [BTC] on Binance. This gave that specific token a price of $6.36 million.
The Syscoin team were fairly quick to respond with an in-depth explanation of the event. In a post on their GitHub page, the team provided a run-down of the events that occurred and their response to it.
They emphasized the fact that it was not a hack or a 51% attack. It was a chain of events caused by the Syscoin 3.0.6 update that was released on 23rd June. The update was aimed at fixing a potential superblock validation bug.
The official post stated:
“This is a mandatory update for existing Syscoin 3 users. It fixes a potential superblock validation issue. Users that experience that error must upgrade to 3.0.6 to proceed to validate blocks. If you haven’t done so please update your sentinel if you are a masternode operator.”
Fast forward to 3rd July, where the Syscoin team reportedly “detected large buy walls across exchanges”. At the same time, the blocks that were being processed did not include transactions regularly. Moreover, masternodes on the network were expiring, with the mining difficulty dropping due to large miners not mining.
The team stated that a Superblock was created at around 1:00 PM PST, which they stated was “expected and prepared for weeks in advance”. This, in turn, caused some miner nodes to halt.
After this, several large mining pools set fee policies that were more than the default rate for the coin. Transactions that did not satisfy the criteria became “backed up” in the mempool of the chain. Upon continued mining by miners with lower fee rates, these transactions were processed in batches, which resulted in the appearance of “larger than normal amounts of Syscoin to be transacted in a single block”.
Irregular behavior occurred at this point, with large block output values of 544 million and 1.2 billion SYS tokens appearing on the explorer. Syscoin stated:
“This resulted from majority miners having higher fee policies and the smaller miner picking up transactions when it won a block at a lower fee. We saw hundred of transactions bunched up in these blocks with high output values.”
The team went on to state that these were atypical behavior, as someone was using the address with the most Syscoin to send withdrawals of the coin. The transaction was unchained, with the block containing only the normal 34.56 SYS coins. They stated:
“This was a non-issue and also unrelated to activities of the price on exchanges, but obviously a chained transaction set of a 46 million Syscoin output could quickly add up to a large amount, possibly much larger than the existing supply. This is precisely what happened in these blocks.”
This was then followed by their announcement about “possible issues” on the blockchain, asking exchanges to halt trading. Later, Binance reset their API and resumed their trading. They said:
“As all of these events coincided with each other, they understandably spawned a fairly dramatic response in the crypto community. Our observations conclude that the later action was extremely aberrant.”
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