Zano Rolls Back Blockchain by a Month Following Gateway Address Exploit

Blockchain Rollback and Its Implications

To address the consequences of the vulnerability, Zano rolled back its blockchain to block 3,833,000, effectively reverting to a state before Hard Fork 6 activated the vulnerable Gateway Addresses feature. This rollback invalidates roughly a month of blockchain history, including both legitimate transactions and unauthorized tokens minted due to the exploit. Transactions from that period will no longer appear on the restored chain and will require reconciliation. However, payments already settled on other blockchains cannot be reversed.

The Zano team is preparing a compensation and claims process to address potential losses incurred by users affected by the incident. Quinten van Welzen, Zano’s head of marketing and growth, explained that without such action unauthorized ZANO and fUSD tokens would remain in circulation without limits, diluting the value for all holders and breaking the fundamental promise of a fixed token supply. He emphasized that ignoring the exploit would incentivize attackers to retain value from stolen tokens, undermining the project’s integrity.

The Gateway Address Vulnerability

Zano has not yet released a comprehensive post-mortem report but confirmed the exploitation stemmed from its Gateway Addresses feature. Gateway Addresses were designed to simplify integration for bridges, exchanges, and payment services by allowing management of funds through a single account-style balance, unlike Zano’s previous use of UTXO (Unspent Transaction Output) models.

Previously, Zano wallets tracked funds as separate outputs, making it more complex for exchanges and services to scan, identify incoming payments, and select outputs for withdrawals. Gateway Addresses were introduced in Hard Fork 6 but introduced the vulnerability that allowed unauthorized token creation.

Restarting the blockchain prior to Hard Fork 6 removes the problematic Gateway Address functionality and restores the pre-fork accounting method, thereby resolving the issue.

About Zano and Future Prospects

Zano launched in May 2019 as a layer-1 blockchain focused on private transactions. Transactions conceal sender, receiver, amount, and asset type, ensuring privacy. Besides its native ZANO token, Zano supports custom digital asset creation. Freedom Dollar (fUSD) is one such token operating on Zano’s blockchain.

Van Welzen acknowledged that rolling back a month of blockchain history results in a loss of work and a blow to trust that the team must rebuild. Nevertheless, they see the rollback as essential to uphold the agreed fixed supply and provide a foundation for recovery. He stressed that the alternative—doing nothing—would mean seven years of development going to waste, as the project’s reputation and control over its currency would be irreparably damaged.