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Taiko halts its Ethereum layer-2 network after a bridge exploit, token dives
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- DeepHorus
Taiko Halts Ethereum Layer-2 Network Following Bridge Exploit, TKO Token Plunges
June 22, 2026 – The Taiko Network, an emerging Ethereum Layer-2 scaling solution, has been forced to halt its entire bridge and network operations following a critical security exploit. The incident, which allowed an attacker to forge withdrawal proofs, resulted in a loss of approximately $1.7 million and has sent shockwaves through its community, causing its native TKO token to dive sharply in value.
Taiko launched earlier this year, positioning itself as a type-1 ZK-EVM (zero-knowledge Ethereum Virtual Machine) designed for compatibility and performance. Its core function relies on a bridge to transfer assets between the Ethereum mainnet and its own Layer-2 network. The project had been gaining traction for its technical approach but had not yet achieved the scale of larger competitors like Arbitrum or Optimism, making this early security setback particularly damaging.
The attack, disclosed in the early hours of June 22, exploited a vulnerability in the bridge's verification mechanism. The attacker reportedly submitted fraudulent proofs to the bridge contract, claiming to have deposited ETH on the Layer-2 and attempting to withdraw it from the mainnet. By successfully forging these proofs, they managed to drain approximately 370 ETH from the bridge before the flaw was detected.
In response, the Taiko team executed an emergency shutdown, pausing both the bridge and network to prevent further losses. "Our security partners and core team identified a critical vulnerability in the withdrawal proof process," the project stated in an official post-mortem. "We have halted the bridge and are conducting a full security audit to ensure no further funds are at risk." Fast containment is credited with limiting the damage, though the operational freeze has left users unable to move assets.
The market reaction was swift and severe. The TKO token, which had been trading at approximately $2.50 prior to the announcement, plunged over 30% to around $1.70 within hours. The exploit has heightened investor anxiety about the security of new Layer-2 solutions, a sector that has seen multiple high-profile bridge hacks in recent years, including the $600 million Ronin Network incident in 2022 and the $120 million Euler Finance breach in 2023.
Reactions from the broader crypto security community have been mixed. While some commend the team for rapid action, others criticize the premature launch of the bridge functionality. "This is yet another example of the recurring flaw in bridge verification logic," noted a security researcher from a prominent auditing firm. "Projects must prioritize third-party audits and formal verification before launching with real user funds."
Looking ahead, Taiko has outlined a three-phase recovery plan. First, the team will complete a comprehensive audit with external security firms. Second, they intend to develop a compensation plan for affected users, potentially leveraging treasury funds. Finally, the bridge will be relaunched only after undergoing rigorous testing. The incident serves as a stark reminder of the persistent security challenges in blockchain interoperability, where a single code flaw can undermine both user funds and project credibility overnight. The success of Taiko’s recovery will be closely watched as a test case for resilience in the Layer-2 space.
