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Ethereum layer-2 blockchain Linea has come under scrutiny from the crypto community following its decision to unilaterally stop block production in response to a hack on Velocore, a decentralized exchange (DEX) operating on its network. The move has ignited a discussion about the importance of decentralization and censorship resistance in the blockchain industry.

The Velocore hack resulted in the transfer of 700 ETH, worth over $2.6 million, from the Linea network via an undisclosed third-party bridge. Linea stated that it halted the sequencer to prevent further funds from being bridged out after failing to contact the DEX team promptly. The blockchain also censored the hackers addresses to mitigate the impact on its users.

Linea defended its actions, stating that the hacker was starting to sell a significant amount of tokens for ETH, which could have led to additional problems for users beyond the liquidity pool-draining exploit.

However, the crypto community has criticized Lineas decision, with some arguing that it contradicted the core principles of decentralization and censorship resistance.

Mert Mumtaz, CEO of Helius Labs and a Solana supporter, acknowledged the reasoning behind the move but questioned its long-term implications. Alex Gluchowski, CEO of Matter Labs, stressed the importance of decentralization for all sequencers and called on layer-2 solutions to prioritize integrating decentralization into their platforms.

In response to the criticisms, Linea reaffirmed its commitment to decentralizing its network and sequencer to prevent similar incidents in the future. The blockchain stated that its goal is to create a permissionless, censorship-resistant environment where the team will no longer have the power to halt block production or censor addresses.

When our network matures to a decentralized, censorship-resistant environment, Lineas team will no longer have the ability to halt block production and censor addresses this is a primary goal of our network, Linea stated.

Linea also noted that most competing networks still depend on centralized technical operations to safeguard ecosystem participants. The incident has reignited the debate about the role of centralized entities in decentralized systems and the blockchain trilemma challenges faced by protocols and networks on the matter of balancing security, decentralization, and scalability for users.

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Linea faces criticism over block production halt - Crypto Briefing