Flow (FLOW) lags behind the market recovery. The token lost more than 10% of its value in the last 24 hours.
This decline comes while the network is working on recovery measures after a recent hack.
Why is the FLOW token price declining?
The crypto market rose nearly 2.3% today, with all top 10 coins in the green. Bitcoin (BTC) went above $90,000 and the Ethereum (ETH) price also rose above $3,000.
But FLOW did not benefit from this general rally. According to data from BeInCrypto Markets, the altcoin dropped nearly 14% in the last 24 hours. Thus, FLOW was the second biggest loser of the day on CoinGecko.
It is worth noting that the decline did not start only today. Like the rest of the market, FLOW has faced issues in recent months.
The decline became greater on December 27, after a security issue occurred on the network. The price plummeted by more than 50% in one day, reaching a new all-time low of $0.079 on Binance. Leading South Korean exchanges Upbit and Bithumb halted withdrawals and deposits of FLOW.
"Flow (FLOW) has been designated by the affiliated exchanges of the Digital Asset Exchange Alliance (DAXA) as an asset with warning status. Deposits and withdrawals of Flow (FLOW) have already been suspended. When services resume, only withdrawals will be possible again, the reopening of deposits will be announced later according to the procedure after this warning status," states the translation of the announcement from Upbit.
Flow Foundation is going into recovery after $3,9 million exploit
On December 27, an attacker managed to siphon off approximately $3,9 million in assets from the Flow network by exploiting a vulnerability in the execution layer. The team was able to contain the attack and prevent further losses.
The Flow Foundation emphasized that the incident did not compromise existing user balances.
"The confirmed funds that were siphoned off are a manageable amount that poses no risk to the solvency of the network or to user funds. The first priority is to resolve the issue and ensure a safe restart," wrote the Foundation.
First, Flow proposed to revert the network to a checkpoint before the attack. However, after much feedback from validators and developers, the Foundation changed the plan and came up with a new recovery plan.
This approach prevents a rollback or reorganization of the network, thus protecting legitimate user activities. According to the Foundation, more than 99.9% of accounts remain unaffected and will be fully usable again at restart.
"At the restart of the network, accounts that received fraudulently minted tokens will be temporarily restricted as a precaution. The Flow core development team will propose a software update to node operators. This update will temporarily allow the Community Governance Council to recover fraudulent assets," the post added.
The Foundation then announced that validators agreed to the update and that the network is now in a recovery and testing phase. Phase 1 of the Flow Network Recovery Plan starts at 6 AM PT.
At that time, the Cadence environment will be functioning normally again. Accounts affected by the attack will remain limited for now.
The EVM environment is read-only. According to the Foundation, over 99.9% of Cadence accounts will regain full access in this phase.
These steps show that the team is determined to restore everything. However, it is still uncertain whether the recovery process will be sufficient to regain market trust and allow the price to rise again.
