Even a hacked Polygon may not stop MATIC from pursuing a 90% price rally

Key Takeaways:

  • Polygon network a $2 million to a white hat hacker after he identified a major vulnerability.
  • Meanwhile, MATIC prices are moving in a ascending triangle formation, eyeing a 90% breakout.

NEW DELHI (CoinChapter.com) — Polygon (MATIC) network, a scalability solution for Ethereum, has patched a bug on its plasma network that would have put a massive $850 million at risk.

Twitter user Gerhard Wagner discovered the vulnerability in the Polygon Plasma bridge. The bug could have allowed a potential attacker to exit their burn transaction multiple times. Mr. Wagner surmised an attacker could burn the same amount of tokens up to 223 times and receive 223 times the amount they deposited.

As such, with a $50,000 investment, malicious users stood to gain nearly $11.15 million in return.

Meanwhile, Polygon’s native token, MATIC, is eyeing a breakout from a bullish pattern. MATIC prices have formed an ascending triangle, a bullish signal, on the daily charts. An ascending triangle chart pattern forms when an asset’s price moves so that a horizontal line connects the swing highs and a rising trendline for the swing lows.

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Ascending triangles are often a type of continuation pattern since the breakout normally occurs in the direction of the prevailing trend. However, it is important to observe trading volumes. If the breakout occurs on lower volume, it is a sign that the rally lacks strength, and prices might soon pull back.

Polygon Bugged

Polygon paid Gerhard Wagner a bounty of $2 million for identifying the vulnerability. As per Immunefi, the platform that hosts Polygon’s bounty program, it is the highest bounty pain in the DeFi world, ever.

Polygon Plasma Bridge is a trustless transaction channel that provides a scaling solution that is low-cost and flexible. It helps users transfer assets from the Ethereum mainnet to Polygon and withdraw it back on Ethereum.

The Plasma Bridge’s exit mechanism requires users to burn the tokens before transferring them to the mainnet. Furthermore, the exit mechanism’s main vulnerability affected WithdrawManager. It is a specific function that authenticates burn transactions in previous blocks.

Mr. Wagenr reported the bug to ImmuneFi, who then proceeded to inform Polygon. To the network’s credit, Polygon immediately took action to fix the underlying issue. The exploit has since been properly patched with no loss of user funds.

Also Read: XRP price poised to grow higher as Ripple enters partnership with Middle Eastern payment giant.

The bug could have allowed attackers to siphon off the entire value locked in the bridge, which, at the time of Mr. Wagenr’s investigation, was worth $850 million at the time.

Polygon launched its bounty program in Sept this year as an open invitation to white hat hackers to discover and report any potential vulnerabilities. However, the incident serves as a reminder of the interoperability blockchain bridge’s security issues.

The security issues with these bridges leave several avenues prone to attacks from hackers. Recently, Poly Networks had a security breach that resulted in the loss of more than $600 million.

MATIC Price Charts

MATIC is moving in an ascending triangle pattern, charting higher lows on the daily chart. As such, a breakout in the direction of the uptrend would see a price movement equal to the height of the triangle. Hence, prices would likely go as high as $2.899.

From current prices, it would mean a gain of almost 90%.

Meanwhile, MATIC breached above its immediate resistance on Oct 21, but prices pared soon afterward, indicating strong resistance at $1.599. To break above the ascending triangle’s horizontal trendline, MATIC would need to conquer resistance at $1.66.

MATIC price movements have formed an ascending triangle pattern. Source: MATICUSD on Tradingview.com
MATIC price movements have formed an ascending triangle pattern. Source: MATICUSD on Tradingview.com

The next resistance for the Polygon token is the horizontal trendline of the triangle pattern. Once MATIC breaks above it, bulls would likely consolidate before targeting news upsides. On the other hand, immediate support for MATIC is at $1.423.

The next support level is $1.449, near the Polygon token’s 50-day MA and 26-day EMA lines. After that, further support comes from MATIC’s 200-day MA line near $1.22. The Polygon token is trading above its slow and fast-moving averages, indicating the token is bullish across all time horizons.

Furthermore, trend-based momentum oscillator MACD gained some life after its histogram dropped to near bearish levels on Oct 14. The histogram charts the distance between the MACD line (difference between 12-day and 26-day EMA) and its signal line (9-day EMA of MACD).

MACD continues to be bullish for MATIC. Source: MATICUSD on Tradingview.com
MACD continues to be bullish for MATIC. Source: MATICUSD on Tradingview.com

If the histogram bars are positive, the MACD line is above the MACD signal line, and the momentum is bullish and vice versa. Interestingly, the bars are gradually declining, probably indicating the bullish momentum at present is slowly decaying.

The relative strength index for MATIC is at 60.30, comfortably in the neutral region. Furthermore, it seems the RSI trendline is moving laterally.

At the time of writing, MATIC was trading at $1.507, down 1.86% on the day.

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