Dapper Labs’ Layer 1 blockchain Flow is up and running again after a $3.9 million exploit on Dec. 27 that caused more than 24 hours of downtime, and a drastic drop in token price.
The FLOW token dropped 40% from a $280 million market capitalization to $170 million early Saturday morning. Despite resuming activity earlier today, FLOW holders are yet to experience any relief bounce.
According to the Flow Foundation, the incident occurred on Dec. 27, when an attacker exploited Flow’s execution layer and transferred almost $4 million in crypto assets off the network before validators could come to a consensus to halt it.
Flow’s Response
The foundation said that user balances were not affected, and the $3.9 million loss is “manageable.” Initially, Flow intended for the network to be back online within 4 to 6 hours of its incident report, however the process required a time extension for validator coordination, and Flow is back up and “Phase 1 operational” as of 10 a.m. EST today.
Leading bridge solutions including Stargate Finance and deBridge confirmed that both interoperability protocols will resume activity on Flow once the network is fully restored.
Just after noon EST today, the blockchain's development company Dapper Labs released a statement on X regarding the incident, confirming that the network is operational and stating, “What happened over the past 48 hours was a stress test of the ecosystem that Dapper helped build. The response required coordination across dozens of independent parties—validators, bridges, exchanges, protocol teams.”
On the back of the network’s resumption, Dapper Labs touted the blockchain's validators' ability to reach a fully decentralized consensus to respond swiftly to the exploit.
Initially, Flow planned to roll back the chain, which would revert the network to its pre-exploit state, meaning the $3.9 million in funds would be fully intact. However, after what included public responses from ecosystem participants, Flow ended up pivoting to an alternative solution which has been praised by affected third parties, such as deBridge.
DeBridge co-founder Alex Smirnov took to X to share his thoughts on the initial rollback plan yesterday where he said, “The rushed decision to roll back the chain will likely cause financial damage far exceeding the impact of the original exploit.”
Today Smirnov followed up on Flow’s pivot stating, “Appreciate the turnaround from the Flow team and the collaborative effort to bring the ecosystem back to normal.”
Dapper Labs also said that Flow will publish more details in a post-mortem in the near future. The Defiant reached out to Flow for comments on the incident, but has not received a response as of publication time.
NFT Heyday
Flow touts itself as “the Home of Consumer DeFi,” and is the native blockchain of Dapper Lab’s ecosystem, known for its work on mainstream-focused NFT products such as NBA Top Shot, CryptoKitties, and the Disney Pinnacle NFTs.
Despite Dapper Lab’s highly successful role in the early days of NFTs, the company didn’t launch Flow until July 2022, after NFTs had begun to slow down, and the ecosystem was dominated by Ethereum and Solana.
As a result, Flow has had a slow start, and didn’t cross the $10 million total value locked (TVL) mark until 2023. The blockchain has had a strong 2025, however, seeing its TVL grow by as much as 210% from $38 million in January to a $118 million all-time high in November.
