Zcash dips 45% after critical orchard pool vulnerability raises counterfeit token risk

Key takeaways

• ZEC is down 45% and is now trading around $309 per coin.
• The vulnerability was fixed within days, and findings suggest that actual exploitation of the bug is unlikely.

Zcash Zcash fell sharply on Friday after researchers disclosed a critical vulnerability in its Orchard shielded transaction pool that could have theoretically enabled the creation of unlimited counterfeit tokens.

The price dropped about 45% to $309 with most of the decline occurring shortly after the security disclosure was made public.

Critical flaw found in Zcash Orchard shielded pool

The vulnerability was identified by security researcher Taylor Hornby during an audit commissioned by Shielded Labs, an independent support organization for the Zcash ecosystem.

According to the report, the issue was located in the Orchard circuit, the zero-knowledge proof system that secures private transactions within Zcash’s shielded pool.

The flaw allowed under-constrained inputs in elliptic curve computations, making it possible to pass invalid values as valid proofs

In a test environment, researchers were able to generate an undetectable counterfeit ZEC. The bug has existed since Orchard’s activation in May 2022. The vulnerability was patched on June 1, shortly after discovery.

Despite the severity of the issue, Shielded Labs said there is no clear evidence that the vulnerability was exploited in the wild.

Reasons cited include: The complexity of Orchard’s privacy system obscures transaction tracing, the bug remained undetected for years despite cryptographic scrutiny, and no confirmed anomalies in supply have been identified

However, the organization acknowledged that absolute certainty is impossible due to the privacy-preserving nature of shielded transactions.

ZEC dips by 45%. Will it recover soon?

The ZEC/USD 4-hour chart is bearish and efficient as Zcash has lost 45% of its value in the last 24 hours.

The momentum indicators have flipped bearish, with the RSI of 33 indicating an oversold condition. The MACD lines are also within the negative territory, adding further confluence to the bearish bias.

sell

If the selloff continues, ZEC could drop below the Friday low of $245 and retest the $200 pychological level.

However, the bounce back above $300 indicates that the selloff could end soon. If the bulls regain control, ZEC could surge towards the first major resistance level at $413, with further hurdles around the $527 zone.