Polygon Labs has patched several security flaws across its proof-of-stake network through two coordinated hard forks, including a vulnerability that could have forced the full validator set to perform costly processing from a single crafted transaction.

Polygon’s Validators Support Team disclosed the fixes in an Aug. 27 forum post after the Austin and Kyoto hard forks had already been tested and activated. The team said consensus-affecting security fixes were deployed privately, validated on the Amoy testnet and disclosed only after the mainnet fleet was protected.

The vulnerabilities affected Bor, Polygon PoS’s execution client, and Heimdall, which handles validator coordination and other consensus functions. Polygon said it found no evidence that any of the issues had been exploited or caused disruption on mainnet.

Polygon hard forks close block processing flaws

The Austin hard fork upgraded Bor to version 2.10.0 and addressed two denial-of-service paths tied to block processing.

One involved state-sync events used for L1-to-L2 bridge deposits. Such events can execute contract code and precompiles, but their execution was not subject to an effective per-block gas bound. Austin introduced a limit on how much gas state-sync events can consume within a block, preventing them from exhausting processing resources.

A separate weakness involved TxDependency data used during block processing. A malicious block producer could supply an oversized data field, potentially causing excessive memory allocation and crashing peers processing the block.

Polygon described both issues as block-processing denial-of-service vectors instead of consensus-correctness flaws and said neither had caused known disruption before the patches were deployed.

The Kyoto hard fork, which moved Heimdall to version 0.11.0, covered a larger group of input-validation and consensus-hardening fixes.

Among them, Polygon identified deeply nested google.protobuf.Any fields as the most severe vulnerability in the batch. Heimdall transactions can wrap messages inside Any fields, which in turn can be nested inside one another.

Without a depth limit, an attacker could construct a transaction containing deeply nested fields at relatively little cost while forcing every validator processing it to carry out substantial decoding work. Polygon said the flaw provided a permissionless route for imposing costly, coordinated processing across the validator set.

Kyoto added a byte-level scan that rejects transactions once nesting exceeds a defined threshold. The check applies at both mempool admission and the consensus processing stage so the same transaction cannot be accepted through one path and rejected through another.

Other Heimdall fixes covered milestone accounting, checkpoint processing and L1 event replay. Failed future-span creation can now degrade and retry at the next boundary instead of blocking a milestone commit, while new replay keys address an edge case in which distinct L1 events could otherwise collide.

Older Polygon nodes have fallen out of consensus

Both hard forks are mandatory for operators that want to remain on the canonical Polygon PoS network.

Bor v2.10.0 is required for all nodes, while Heimdall v0.11.0 applies to validators and full nodes. Polygon said operators running versions from before the activation heights have already forked away from canonical consensus and must update their software to rejoin the network.

The changes were delivered as binary upgrades, meaning operators do not need to migrate state, modify the genesis configuration or perform a full resync. Nodes that have fallen out of consensus can upgrade and roll back to the appropriate pre-hard-fork height before catching up with the canonical chain.

Polygon has previously used hard forks to address problems affecting its PoS infrastructure. In September 2025, developers executed a hard fork after a software bug caused transaction finality delays of as much as 15 minutes.

The earlier incident affected validator synchronization and local fast finality while block production and Ethereum checkpointing continued. Bor and Heimdall updates were deployed to restore milestone processing, state synchronization and consensus finalization.

A month later, the Rio mainnet upgrade introduced witness-based stateless validation and a Validator-Elected Block Producer model as Polygon continued changing how its PoS network processes and verifies transactions.

Polygon has continued changing its PoS infrastructure

Network performance remained another focus in 2026. In May, crypto.news previously reported that Polygon had reduced block time to an average of 1.75 seconds, its first block-time reduction since launch.

Polygon software engineer Lucca Martins said at the time that the change raised theoretical throughput to roughly 3,260 transactions per second and allowed the network to process about 14% more payments per second. The work formed part of Polygon’s push to support higher transaction volumes from stablecoin payments and decentralized finance activity.

The latest security fixes arrived after Polygon completed the replacement of MATIC with POL as the native gas and staking token on its PoS network. The migration began in September 2024 as part of the Polygon 2.0 roadmap, with MATIC held directly on Polygon PoS converted to POL at a one-to-one ratio.

The original MATIC-to-POL plan designated POL as the token used for gas payments and staking, while its proposed functions were expected to expand as Polygon developed its staking and aggregated-chain architecture.

Changes have extended to Polygon Labs itself. In July, the company cut another round of jobs while completing the integration of crypto exchange Coinme. CEO Marc Boiron said the restructuring was designed to support profitability by 2027 as Polygon Labs moved toward a payments-focused business model.

POL showed little positive reaction to the security disclosure. The token was trading near $0.09983 on Aug. 30, down about 2.3% over the previous 24 hours and 6.8% over seven days, according to CoinGecko data provided with the report. Its price remained about 60.8% lower than a year earlier, giving the token a market capitalization of roughly $1.07 billion.

More Markets has suffered an exploit on Flow EVM that drained about 15.5 million WFLOW from the lending protocol, with blockchain security firm Blockaid estimating the impact at roughly $9.3 million.

Blockaid said in an Aug. 31 X post that an attacker exploited More Markets, developed by More Labs, by using an Ankr bonded liquid staking token together with the protocol’s E Mode mechanism. The security firm identified the mFlowWFLOW lending reserve as the source of the drained tokens and published transactions linked to the attack.

The firm’s initial assessment puts the amount removed from the reserve at 15.5 million WFLOW. Blockaid described the roughly $9.3 million figure as its detected impact, meaning the final loss has yet to be confirmed as investigators trace the transactions and determine where the assets ultimately moved.

Blockaid published an exploit transaction, the contract deployment transaction and a cluster of post exploit transfers. The firm said the cluster contained transactions used to move funds after the reserve was drained, but had not provided a final accounting of the attacker’s holdings at the time of writing.

More Markets exploit targeted its WFLOW lending reserve

More Markets is a decentralized, noncustodial lending protocol deployed on Flow EVM and built using Aave V3 architecture. Its public repository lists nine supported markets and allows users to supply assets for interest, borrow against collateral at variable rates and liquidate positions that fall below required collateral levels.

WFLOW and ankrFLOW are among the assets supported by the protocol. More Markets lists WFLOW with a loan to value ratio of 81.5% and a liquidation threshold of 83%, while ankrFLOW has a 78.5% loan to value ratio and an 81% liquidation threshold.

The protocol’s documentation identifies ankrFLOW as a liquid staking token, or LST, while WFLOW serves as the native wrapped asset within the lending market.

Blockaid specifically tied the attack to an Ankr bonded LST and E Mode, but its initial disclosure did not provide a detailed technical breakdown explaining the sequence used to drain the WFLOW reserve. It remains unclear from the disclosure whether the underlying issue originated in More Markets’ implementation, the way the Ankr asset was handled within the lending protocol, its pricing assumptions, or an interaction between the two components.

Ankr’s documentation describes ankrFLOW as a reward bearing liquid staking token issued when users stake FLOW through its staking service. Its value relative to FLOW increases as staking rewards accumulate, while the number of ankrFLOW tokens held by the user remains unchanged.

Ankr lists separate smart contracts on Flow EVM for the ankrFLOW token, staking pool, staking configuration and ratio feed. The ratio feed contains the token’s ratio certificate, according to its documentation.

The company’s Flow liquid staking documentation says users can deploy ankrFLOW in DeFi applications, including lending markets, to borrow against the value represented by their staked FLOW. Ankr states that the Flow liquid staking contracts on Cadence and EVM underwent external audits by Halborn.

Blockaid had not said that Ankr itself was compromised in the incident. Its disclosure only identified the bonded LST and More Markets’ E Mode mechanism as components used by the attacker.

Flow EVM has remained separate from the attack vector disclosed so far

The Aug. 31 incident targeted an application running on Flow EVM based on the information released by Blockaid, with no indication in the initial disclosure that the Flow blockchain itself had been compromised.

Flow EVM provides an Ethereum compatible environment on Flow, allowing applications written for the Ethereum Virtual Machine to operate on the network. More Markets runs its lending contracts in that environment.

Flow has previously promoted both More Markets and Ankr as applications available to users within its DeFi ecosystem. Its Community Rewards program, for example, offered rewards for activity involving lending protocols such as More Markets and for staking FLOW through Ankr’s liquid staking product.

The distinction between the More Markets incident and a network level exploit is particularly relevant because Flow suffered a separate security breach in late 2025.

As crypto.news previously reported, a Dec. 27 attack exploited a vulnerability in Flow’s Cadence execution layer and allowed an attacker to duplicate fungible tokens before extracting approximately $3.9 million in value.

Flow Foundation’s subsequent post mortem said the attacker deployed more than 40 malicious smart contracts in a coordinated sequence. A flaw in Cadence runtime version 1.8.8 allowed a protected asset that should not have been copyable to be disguised as a standard data structure and duplicated.

More than 1 billion counterfeit FLOW tokens were sent to centralized exchanges during that incident. Flow said 484.4 million FLOW were later returned by OKX, Gate.io and MEXC and destroyed, while the network isolated 98.7% of the remaining counterfeit supply.

Flow previously changed its recovery plan after $3.9 million exploit

The December attack forced Flow validators to halt the blockchain within hours of the first malicious transaction. Flow Foundation initially proposed a full chain rollback, which would have returned the network to a checkpoint before the exploit.

The proposed Flow chain rollback faced opposition from bridge operators and other ecosystem participants. Critics warned that reversing confirmed transactions could produce duplicated balances for users who had moved assets through bridges during the affected period and create losses for users who had bridged assets in.

Flow subsequently abandoned the global rollback and adopted an isolated recovery process designed to identify and destroy counterfeit assets while retaining legitimate transaction history.

During the recovery, developers worked on restoring both Cadence and Flow EVM functionality. Accounts linked to suspicious activity faced temporary restrictions while external forensic firms helped verify affected accounts, with Flow estimating that more than 99.9% of accounts would regain full access once the recovery was completed.

The fallout later extended to South Korea, where Flow Foundation and Dapper Labs sought a court order in March to stop Upbit, Bithumb and Coinone from ending trading support for FLOW. The exchanges had moved toward delisting after the December security incident, while Flow maintained that existing user balances had not been compromised.

For the More Markets attack, Blockaid’s Aug. 31 disclosure remained an initial assessment. The security firm said more details were still being investigated after identifying the 15.5 million WFLOW outflow and the subsequent transaction cluster used to move funds after the exploit.

On Aug. 21, 2026, decentralized exchanges across the chains tracked by DeFiLlama processed about $10.5 billion in spot volume over 24 hours.

Solana accounted for roughly $2.8 billion. The picture was similar over 30 days: $48.5 billion of the market’s $181.2 billion total, or just under 27%.

That is a large share for one layer-1 network, but the headline figure does not tell traders where they can get a reliable fill.

Aggregate volume measures how much value changed hands, not where usable liquidity sits. On the same day, PumpSwap processed about $485 million, BisonFi $466 million, Orca $307 million, Raydium $260 million and Manifest $218 million. Together, those five venues handled roughly $1.74 billion, or 62% of Solana’s total. Dozens of other protocols shared the remainder. The practical question is therefore not how many pairs a DEX lists. It is whether the venue can absorb a specific order when the trader needs to execute, and how much slippage appears when it cannot. SOL is not limited to Solana-based venues either; it also trades as a perpetual contract on platforms built on other networks, including Arbitrum.

1. The fee model quietly shapes how people trade

Solana’s cost structure is unusual enough to change behavior. Every transaction pays a base fee of 5,000 lamports per signature, with an optional prioritization fee priced in micro-lamports per compute unit, as the protocol documentation lays out. At current prices the base component rounds to fractions of a cent.

Those low costs influence trading in two distinct ways.

The advantage is straightforward. Cheap transactions make frequent retail trading possible where the same strategy could be uneconomical on Ethereum mainnet. Splitting a position into 15 smaller orders adds little network cost.

The drawback becomes clearer during congestion. Cheap failed transactions also make it inexpensive to flood the network. Priority fees can then become the real cost of getting a transaction included, with traders competing in an auction they may not win. Anyone budgeting only for the base fee can face delays or failed execution when timing matters most.

2. Volume charts have three blind spots

Routing can inflate totals. An aggregator may split one order across several pools. Each venue records the portion it fills, while the aggregator may also record the complete trade. The activity is genuine, but adding every reported figure can count the same order more than once.

Incentives can make liquidity look more durable than it is. Volume attracted by token rewards often leaves when those rewards end. A busy pool can become much thinner within a quarter, while historical charts offer little warning.

MEV creates another hidden cost. A large order submitted to a public mempool can attract sandwiching, backrunning and priority-fee competition. The loss does not appear as a separate charge; it appears in a worse execution price.

Onchain volume remains useful, but it should be treated as a starting point rather than a final verdict.

3. Automated market makers and order books are answering different questions

Most of the Solana venues above are variations on the constant-product idea Uniswap popularized, where a pool prices assets against a formula instead of against resting bids and offers, a mechanic the protocol’s own documentation still describes more clearly than anyone else has managed. It works remarkably well for long-tail assets, because a pool can exist for a token nobody would bother quoting by hand.

The limitation is depth. Price impact on an AMM rises as an order consumes more of a pool, and liquidity outside leading pairs can be thinner than the interface suggests. Order books reverse that tradeoff: they can offer stronger execution where market makers are active, but may have little usable depth elsewhere.

Derivatives venues concentrate liquidity differently from spot exchanges. Perpetual platforms focus activity in a smaller group of heavily traded contracts instead of spreading it across thousands of tokens. A BTC or SOL perpetual order book can therefore be deeper than a spot market for the same asset. Some hybrid platforms match orders offchain and settle them onchain, aiming to provide order-book execution without requiring users to give up custody.

4. The decentralization question does not resolve itself

The Bank for International Settlements made an argument back in its December 2021 Quarterly Review that has aged well: DeFi protocols exhibit what the authors called a decentralization illusion, since governance, sequencing and upgrade authority almost always concentrate somewhere identifiable.

Five years later, Solana’s DEX market offers a useful example. Its settlement layer is permissionless, but liquidity remains concentrated, a few aggregators route much of the order flow, and incentive programs controlled by small teams can shape activity. This is not evidence that the network has failed to decentralize. It shows that a decentralized ledger does not automatically create a decentralized market structure.

How the three venue models compare

What to check before routing a large order

Check depth, not just volume. Review the order book or pool reserves for the exact pair and model the expected fill at the intended trade size. Two venues with similar daily volume can produce very different results.

Separate protocol fees from network fees. Solana’s network fee may be small, but venue charges, spreads and price impact can still materially change the final cost.

Identify the source of liquidity. Organic market-maker activity can behave differently under stress from liquidity attracted mainly by temporary rewards.

Understand the custody model. Assets held in an exit-ready smart contract present different risks from collateral placed with an intermediary whose balance sheet cannot be inspected. Execution quality does not answer the custody question.

Test the venue against difficult conditions. A market can look deep during calm trading and deteriorate quickly during a sharp hourly move.

Solana’s onchain trading market has earned a large share of decentralized exchange activity. Still, a chain processing $48 billion in monthly volume does not prove that every venue can handle every order. Traders need pair-specific evidence before choosing where to execute.

Trading-volume data: DeFiLlama, retrieved Aug. 21, 2026.

Tether CEO Paolo Ardoino has challenged the Bank for International Settlements’ preference for tokenized bank deposits, arguing that fully reserved stablecoins give users a stronger alternative to money held under fractional reserve banking.

The Bank for International Settlements laid out the case for tokenized deposits on Aug. 28, when General Manager Pablo Hernández de Cos told the Jackson Hole Economic Symposium that stablecoins still fall short of several properties needed to function as money at scale. Ardoino responded by questioning why savers would choose bank deposits when stablecoins can hold reserves in highly liquid assets such as U.S. Treasuries.

“BIS is rightfully worried about the fact that stablecoins are exposing the emperor without clothes,” Ardoino said. “Why someone should choose to put his savings into a fractional reserve product while stablecoins are fully reserved?”

Tether CEO challenges the BIS case for tokenized deposits

Hernández de Cos argued that stablecoins face problems with redeemability at par, interoperability and financial integrity, while their use outside the United States can create concerns over monetary sovereignty and digital dollarization.

In the BIS model, tokenized deposits remain liabilities of commercial banks and settle through central bank accounts. De Cos said this structure preserves the “singleness” of money because different bank liabilities remain redeemable at par through central bank settlement.

Stablecoins work differently. A user holding USDT who needs to pay someone accepting only USDC may first need to exchange one token for the other in a secondary market, where prices can deviate from their dollar pegs, particularly during periods of stress.

Public blockchains create another concern for the BIS. Stablecoins can circulate across multiple networks and through self-custody wallets, while moving the same asset between chains can require bridges or other infrastructure. De Cos argued that this structure creates interoperability problems and makes consistent enforcement of anti-money laundering and counterterrorism financing controls more difficult.

Ardoino focused his response on the reserve structure behind the two forms of digital money. The Tether executive argued that stablecoins can be backed almost entirely by liquid reserves, including U.S. government debt, while commercial banks operate under a fractional reserve system in which only part of their liabilities are held in liquid assets.

His comments put the reserve question at the center of a debate that has increasingly divided stablecoin issuers and the banking sector as both compete to move fiat-denominated money onto blockchain networks.

Crypto.news recently examined how a tokenized bank deposit remains on the issuing bank’s balance sheet even after being represented on a blockchain. Unlike stablecoins, customer funds do not move into a separate reserve portfolio and can remain available to support the bank’s lending operations.

Tokenized deposits are moving beyond pilot programs

Banks have started building infrastructure around that model as stablecoins take a larger role in digital payments.

JPMorgan Chase, Bank of America, Citigroup and Wells Fargo are developing a shared deposit token network through The Clearing House, with a launch targeted for the first half of 2027. The planned system would initially give multinational companies access to programmable treasury and cross-border payment services.

SWIFT has pursued a similar route. In July, the financial messaging network launched a  blockchain-based shared ledger with 17 major banks, including Citi, HSBC, UBS and BNP Paribas. The system was designed around tokenized bank deposits for round-the-clock cross-border payments.

Custodia Bank and Vantage Bank have taken a different approach by combining the two structures. Their dual-purpose token model is designed to operate as a bank deposit while inside the Hazel network and function as a stablecoin when transferred outside it. The Ethereum-based system has been under testing ahead of a planned fourth-quarter 2026 rollout.

Despite supporting tokenized deposits, Hernández de Cos acknowledged that the model has its own unresolved problems. No multi-bank or cross-jurisdictional ecosystem currently issues tokenized deposits through a fully interoperable framework, he said. Existing systems remain concentrated on permissioned platforms, while some designs resemble bank-issued stablecoins.

The BIS chief said stablecoins and tokenized deposits could ultimately coexist, but argued that tokenized deposits should handle most everyday payments while stablecoins serve more specialized functions.

Stablecoin growth raises the deposit flight question

Ardoino’s criticism comes as the competition for deposits has become part of the U.S. debate over crypto market structure.

Banking groups have repeatedly pushed lawmakers to tighten stablecoin reward provisions in the Digital Asset Market Clarity Act. In July, the American Bankers Association, Independent Community Bankers of America and 76 state banking associations urged Senate leaders to revise Section 404 before the legislation reached the Senate floor.

The groups argued that allowing crypto platforms to provide certain rewards on stablecoin balances could encourage customers to move funds out of traditional bank accounts. Under that argument, deposit losses could leave community banks with less funding available for lending.

Citigroup CEO Jane Fraser repeated the concern in August while supporting passage of the CLARITY Act. Fraser warned that stablecoin rewards could draw deposits away from banks and affect their ability to extend credit.

The dispute partly traces back to the GENIUS Act, which prevents payment stablecoin issuers from directly paying interest or yield to holders. Crypto exchanges and other service providers can still offer some rewards depending on how their programs are structured, leaving lawmakers and banking groups divided over where the restrictions should apply.

Hernández de Cos raised a similar funding issue at Jackson Hole. Stablecoin issuers can increase demand for government debt by placing reserves into Treasury securities, potentially lowering sovereign borrowing costs, he said. At the same time, money leaving commercial bank deposits could increase bank funding costs and eventually raise borrowing costs for households and companies.

Ardoino presented the same movement of funds from the opposite perspective.

“What happens to financial system if people start realizing that stablecoins are safer and move their savings into the better asset class?” he said. “We’re in the Find Out phase.”

USDT remains the largest stablecoin by circulation and has developed a substantial user base outside the United States. Ardoino has repeatedly positioned the token as a dollar-based savings and payments product for markets where access to U.S. dollars or conventional banking services can be limited.

Tether has pursued that market through payment and remittance investments, including its May investment in cross-border platform LemFi, which serves users across African and Asian remittance corridors.

Ardoino said some economies now rely heavily on USDT for both domestic and foreign commerce, while the BIS has warned that increasing use of dollar-denominated stablecoins outside the United States could weaken monetary policy transmission and increase dependence on external monetary conditions.

A common misconception in the realm of cryptocurrency investment is that making money through mining requires an understanding of complex blockchain technology and the purchase of expensive mining hardware.

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South Korea’s National Tax Service has said it will introduce commercial crypto tracing software used by domestic and overseas investigative agencies as it prepares to tax income generated through private wallets from 2027.

Digital Asset reported on Aug. 31, citing responses provided by the NTS to People Power Party lawmaker Kim Sang-hoon, that the agency plans to use software capable of tracing and analyzing digital asset movements between wallets. Similar tools are used by prosecutors, police and the U.S. Internal Revenue Service.

The plan addresses one of the main enforcement problems surrounding South Korea’s incoming cryptocurrency income tax: authorities have limited visibility into transactions conducted through wallets controlled directly by taxpayers.

The NTS acknowledged that the nature of private wallet transactions makes it difficult to identify every unreported transaction. Tax officials said they would continue working to prevent gaps in enforcement, including through the planned tracing system.

South Korea plans to trace private wallet transactions

Self-custody does not remove a taxpayer’s liability under the planned regime. South Korea’s Ministry of Economy and Finance and the NTS previously told Kim’s office that income from transferring or lending digital assets can be taxable regardless of whether the assets are held in a private wallet or on an overseas exchange.

Crypto.news previously reported that South Korea had confirmed the planned tax would cover private wallets and foreign exchanges when the rules take effect.

The tax will apply to qualifying digital asset income generated from Jan. 1, 2027. Annual gains above a 2.5 million won deduction will face a 20% national income tax, with a 2% local income tax bringing the combined rate to 22%.

Taxpayers will not file returns for 2027 income immediately when the rules take effect. The first filing period is scheduled for May 2028, when investors will report qualifying income generated during the previous calendar year.

South Korean authorities have spent months preparing systems for the rollout. The NTS has completed development of a tax-source management system and has been building an integrated analysis system for digital asset taxation, according to government responses previously submitted to Kim’s office.

Work has extended to centralized exchanges. The NTS has been preparing implementation guidance with Upbit operator Dunamu, Bithumb, Coinone, Korbit and Gopax, covering records and other information needed to calculate taxable cryptocurrency income.

The preparations follow several delays to the tax, which was created through amendments to the Income Tax Act. Implementation was initially scheduled for 2022 before being postponed to 2023, 2025 and eventually 2027.

The government kept that date unchanged when it finalized its tax proposal in August, although the National Assembly can still amend the provisions before they take effect.

CARF will cover data held by overseas crypto platforms

For cryptocurrency held through foreign platforms, South Korea plans to rely partly on the OECD’s Crypto-Asset Reporting Framework, or CARF, to obtain transaction information from participating jurisdictions.

CARF creates a system through which tax authorities can automatically exchange information concerning reportable crypto asset transactions. South Korean officials have treated the framework as part of their preparations for identifying taxable activity conducted outside domestic exchanges.

Questions have emerged over jurisdictions where the first CARF information exchanges will occur later than South Korea’s 2027 tax start date.

The United Arab Emirates is one example raised in the material provided by Kim’s office because major international crypto businesses operate from the country. UAE government guidance states that its CARF rules will apply to the 2027 calendar year, with the first exchanges of information expected in 2028.

A Ministry of Economy and Finance official told Digital Asset that this timetable would not necessarily create a one-year information gap for South Korean taxation because information exchanged in 2028 would concern transactions conducted during 2027.

South Korea’s own filing schedule works on a similar timeline. Income earned from crypto transactions during 2027 will be reported by taxpayers in May 2028, meaning the first filing period comes after the year in which the taxable transactions occur.

The NTS gave Kim’s office the same explanation, saying the UAE’s first CARF information exchange in 2028 is expected to cover crypto asset transactions attributable to 2027.

Whether information concerning Binance would be supplied through the UAE under CARF has not been confirmed, according to the original report.

Private wallets remain harder for tax authorities to track

CARF does not remove the separate enforcement problem created by self-custodied assets because private wallets can operate without a centralized exchange maintaining the same type of customer and transaction records.

The NTS told Kim’s office that practical limits remain when authorities attempt to identify unreported private wallet activity. Its proposed use of commercial tracing software would give investigators another way to follow transfers between blockchain addresses when examining potentially taxable transactions.

South Korean authorities have already been expanding controls around transfers involving self-hosted wallets and foreign platforms. The Cabinet approved rules in August that tighten overseas crypto transfers by applying risk-based controls to transactions involving foreign exchanges and personal wallets.

Under those amendments, transfers of at least 10 million won involving overseas exchanges or private wallets require domestic exchanges to operate internal suspicious-transaction monitoring systems. Higher-risk counterparties can face transfer restrictions, while transfers between registered Korean virtual asset service providers will fall under expanded Travel Rule requirements.

Tax authorities have separately examined how crypto held outside centralized exchanges can be handled during enforcement proceedings. In July, officials proposed a self-custodied crypto seizure framework that would address assets controlled through private keys.

The proposal called for changes to the Criminal Procedure Act to establish clearer procedures for seizing such assets. Officials recommended warrant requirements and court-supervised joint wallets for storing cryptocurrency obtained during enforcement proceedings.

Political disagreement over the underlying crypto tax remains unresolved ahead of the 2027 deadline. People Power Party lawmakers have pursued several routes to stop or postpone the levy, including legislation seeking its repeal and another proposal that would move implementation to 2030.

Lawmaker Park Soo-young argued in August that the tax could drive more Korean investment capital toward overseas cryptocurrency platforms. The government, however, has continued preparing for the existing timetable, under which taxable crypto income begins accruing on Jan. 1, 2027 and the first returns covering that income are filed in May 2028.

XRP Ledger validators are considering two amendments that would add single-asset vaults and fixed-term lending directly to the network’s core protocol.

The amendments, XLS-65 and XLS-66, are open for validator voting but have not reached the support required for activation. An amendment must maintain support from more than 80% of trusted validators for two consecutive weeks before it can become active.

Ripple’s validator voted in favor of both amendments in August. However, Ripple cannot approve the changes independently because validators decide whether to support each amendment.

Current support remains well below the activation threshold, according to the XRP Ledger’s amendment records. The percentage can change as validators update their positions, making the threshold and subsequent two-week period more important than any single daily reading.

XRP Ledger lending separates credit from execution

XLS-65 would introduce Single Asset Vaults. These structures would pool one type of asset from multiple depositors and issue vault shares representing their proportional interest in the assets.

A vault could hold XRP, Ripple USD or another supported XRP Ledger asset. The vault manager could then allocate pooled liquidity to lending or other financial services under predetermined rules.

XLS-66 would use that pooled liquidity to fund fixed-term loans. The proposed XRP Ledger lending system relies on off-chain underwriting rather than automatic overcollateralization and liquidation.

Institutions would conduct identity checks, assess borrowers, negotiate loan terms and complete legal reviews outside the blockchain. The network would then record and execute agreed activities such as loan issuance, interest accrual, repayments and defaults.

This structure reduces reliance on application-level smart contracts. It does not eliminate credit, operational or counterparty risk. Depositors could still lose money when borrowers default or when underwriting proves inadequate.

Ripple, Clearpool and Cicada prepare an RLUSD fund

Product development is already taking place while validators consider the amendments. Clearpool is testing an institutional credit product on the XRP Ledger development network.

The planned fund would provide RLUSD-denominated working-capital loans to fintech and payment companies. Cicada Partners would source borrowers, establish lending terms and monitor their financial condition. Clearpool would provide the infrastructure for creating and operating the credit pools.

Ripple will participate as a limited partner alongside other investors. The company is providing capital, but it is not serving as a financial backstop. Ripple would therefore invest on comparable terms and would not guarantee losses suffered by other participants.

The companies have not disclosed the fund’s target size or Ripple’s commitment. As the planned RLUSD credit fund remains in testing, it cannot use the proposed native lending functions on mainnet before both amendments activate.

Clearpool said its integration will use isolated markets managed by independent risk specialists. This approach is designed to prevent a problem involving one borrower or pool from spreading across every lending market.

What the lending vote means for XRP holders

The amendments could create new uses for XRP Ledger assets, but they would not automatically provide yield to every XRP holder. Access would depend on which vaults launch, the assets they accept, their eligibility rules and their underlying borrowers.

Some institutional pools may use permissioned domains and verified credentials. Retail participation is therefore not guaranteed. Each product could impose separate restrictions based on jurisdiction, investor classification and compliance requirements.

RLUSD is expected to serve as the main credit asset in the Clearpool and Cicada fund. XRP would retain its network role by covering transaction fees and account reserve requirements.

XRP Ledger transaction fees are destroyed rather than paid to validators. Greater lending activity could consequently increase XRP fee consumption, but fees are normally very small. The effect on total XRP supply would depend on sustained transaction volume and should not be described as a major source of scarcity before real usage data exists.

XRP traded around $1.06 at the time of writing. No verified price movement could be attributed directly to the latest lending vote.

Security reviews do not remove lending risks

The lending code has undergone formal verification and independent security reviews. Halborn’s re-audit found no critical or high-risk vulnerabilities.

The review identified one medium-risk issue, two low-risk issues and two informational findings. The reported matters were resolved, accepted or acknowledged by Ripple’s engineering team, according to the audit findings.

Those reviews address technical behavior, not whether borrowers will repay their loans. Institutions considering a vault must still evaluate its manager, underwriting standards, first-loss protection, withdrawal rules and exposure concentration.

The next formal milestone is validator approval. If either amendment crosses 80%, it must hold that level for 14 days. Clearpool must also finish its development-network testing before moving its product to mainnet.

A related Federal Reserve master-account application submitted through Standard Custody remains separate from the lending vote. Approval could improve RLUSD settlement infrastructure, but the outcome and timing remain uncertain. BNY continues serving as the primary custodian for RLUSD reserves.

Ontology has temporarily halted mainnet block production after its core developers identified a potential security concern during a routine check, leaving on-chain transactions suspended while validators conduct an emergency review.

The Ontology Network said in an official announcement that its core development team detected the potential issue during a daily security check and immediately moved to stop block production as a precaution. No security incident has been confirmed, and the team said it has found no evidence that ONT, ONG or other user assets have been lost or compromised.

Ontology mainnet remains paused during security review

With block production stopped, transactions submitted to the Ontology mainnet cannot be processed until network operations resume. The team has not provided an estimated time for the restart and said the review will take priority over restoring the chain quickly.

Ontology described the halt as a preventive measure, distinguishing it from a response to an active attack or confirmed theft. Developers and network validators are reviewing the mainnet and related components to determine whether the potential concern presents an actual security risk.

Users have been told not to move ONT, ONG or other assets because of the announcement. However, the network advised against attempting time-sensitive on-chain transactions while the pause remains in place.

“Block production will remain temporarily suspended,” Ontology said, adding that the network will not restart until it has been “sufficiently assessed and deemed safe to operate.”

The team has not disclosed the technical nature of the potential security concern, which component triggered the review or whether developers have identified a vulnerability requiring a software change.

Ontology said it is working with validators and relevant ecosystem partners during the investigation. A separate announcement will be released before or when block production resumes, after the security assessment and any required upgrades have been completed.

No user asset losses have been identified

The network emphasized that the current investigation has not produced evidence of compromised user funds.

“There is currently no indication of any loss or compromise of user assets,” the team said. “ONT, ONG, and other on-chain assets remain unaffected based on our current assessment.”

The distinction leaves the mainnet in an unusual operational state: the chain is intentionally unable to process transactions, but Ontology has not reported an exploit, unauthorized asset movement or an ongoing attack.

A mainnet is the production blockchain where transactions involving assets with real economic value are recorded. As crypto.news explained in August, production networks depend on protocol software, economic incentives and validator infrastructure to maintain security while processing live transactions.

The Ontology team has chosen to keep transaction processing offline while the potential issue is examined instead of allowing normal block production to continue during the investigation.

Network pauses can prevent new state changes while developers and validators assess a problem, although the specific reason for Ontology’s decision remains limited to the potential security concern disclosed by its developers.

Ontology did not say whether exchanges or other services using the chain would separately restrict ONT or ONG deposits and withdrawals during the review.

A previous Ontology network upgrade produced similar restrictions at the exchange level without involving a reported security incident. In 2022, Binance suspended ONT deposits and withdrawals while supporting an Ontology upgrade, with services scheduled to reopen after the upgraded network was considered stable.

ONT and ONG form Ontology’s dual-token system

Ontology operates with ONT and Ontology Gas, or ONG, as its two native assets. ONT is used within the network’s governance and staking structure, while ONG serves a separate role in its economic model.

The network has changed its staking framework over time. Crypto.news previously reported that Ontology reduced its minimum staking requirement from 500 ONT to one ONT as part of a governance and staking model update. Requirements for candidate nodes seeking to participate in consensus were reduced from 100,000 ONT to 10,000 ONT.

Ontology’s architecture has historically focused on decentralized identity and data infrastructure. The project uses ONT ID as part of that framework, allowing identity information and credentials to be managed through its blockchain infrastructure.

Interest in that part of the ecosystem resurfaced earlier in 2026 as traders focused on digital identity projects. ONT jumped more than 20% on March 30 as market attention turned to the European Union’s eIDAS 2.0 digital identity wallet rollout. The token traded between roughly $0.0568 and $0.0959 during the 24-hour period covered at the time.

The current mainnet interruption concerns the network’s operation, with Ontology’s announcement making no claim that ONT’s token contract, ONG or another on-chain asset has been exploited.

Ontology has not set a restart time

For now, the mainnet will remain unable to produce blocks while developers and validators work through the security review.

Ontology said the duration of the shutdown is undetermined and that it will prioritize a complete examination of the potential risk over speed. Normal block production will resume only after the network has been assessed and the team considers it safe to operate.

Any upgrades found necessary during the investigation would have to be completed before the restart, according to the announcement. The team did not specify whether an upgrade is currently expected or whether the review could end without requiring changes to the network software.

Users therefore do not need to take action with their ONT, ONG or other on-chain holdings based on the information currently available, but transactions requiring mainnet processing will remain unavailable throughout the pause.

Ontology said updates on the investigation will be published through its official channels as more information becomes available. The network plans to issue a separate notice before or at the time operations resume once the security review and any required upgrades have been completed.