Yesterday (22), a cyber attack on Cetus Protocol, a decentralized finance (DeFi) platform on the Sui network, surprised the blockchain community and caused an estimated loss of $260 million.
The incident caused significant losses and reignited the debate on decentralization, one of the fundamental pillars of blockchain technology.
Sui's decentralization is questioned.
Right after the attack, Cetus halted its smart contracts to contain further losses. In a statement, the platform reported that it had proposed a whitehat agreement to the attacker in an attempt to recover the diverted funds.
Although the measure was deemed necessary, experts pointed out that the suspension contradicts the principle of decentralization. Jesus Martinez, founder of Legion, was categorical: "Decentralization is a lie. They are blocking transactions for the $200 million 'hack' that happened in SUI. The mask has fallen," he said.
The community widely echoed the positioning. Duo Nine, founder of YCC, emphasized that even if Cetus and Sui made the right decision, many projects treat decentralization merely as a marketing concept, with the exception of Bitcoin and Ethereum. "While this is good in this case, it shows that the SUI network can freeze its funds on demand. Decentralization is just marketing outside of BTC/ETH," he stated.
Suspicions of centralization in Sui are not recent. In May 2024, Justin Bons, founder and CIO of CyberCapital, had already accused the network of excessive concentration. According to him, the founders held 84% of the staked tokens, which could allow for manipulations in the system.
Even after Sui denied control over the treasury and the assets allocated to investors, concerns persisted and intensified with the recent attack on Cetus. "The SUI validators are conspiring to CENSOR the hacker's TXs now! Does this make SUI centralized? The short answer is YES; what matters more is why? The 'founders' hold the majority of the supply and there are only 114 validators," said Bons.
The reactions reflect the community's sensitivity to any signs of centralized control.
Balance between control and freedom remains under debate.
The case of Cetus joins other episodes that exposed similar dilemmas. The attack on the DAO in 2016 resulted in a hard fork and the creation of Ethereum Classic. Solana relied on an agreement among validators to resolve a issuance error. The Bitcoin network had to act discreetly to fix an inflation bug involving mining pools.
Furthermore, Tether froze billions of dollars to assist authorities, and critics attacked THORChain for allowing the laundering of funds diverted from Bybit and Coinbase.
"Crypto is a lie. They promised us pure decentralization, unstoppable code, and trustless systems. It turns out that... most major networks hit the brakes when things went wrong," declared investor Cassie.sui.
Projects that do not intervene face criticism for omission; those that act deal with accusations of centralization. "The crypto world is divided. 'If they can freeze funds, is it really decentralized?' vs. 'They saved $162 million from being permanently stolen.' Both sides have valid points. But here's what matters: This changes everything about the L1 security assumptions," said Gautham, co-founder of Polynomial.
Decentralization, once regarded as an unquestionable ideal, is being confronted by real security challenges. It remains to be seen whether networks like Sui will be able to balance protection and freedom, or if the concept of decentralization as we know it is undergoing transformation. However, one thing is clear: this event has profoundly shaken trust in decentralization.
The article 'Hack on Cetus Exposes Centralization of Sui Network' was first seen on BeInCrypto Brazil.