Privacy token Zcash ($ZEC) suddenly rebounded by as much as 30% following a sharp drop in the last two days.
Zcash saw a massive drop on Thursday as traders reacted negatively to a report of a bug in the blockchain’s Orchard privacy pool, which had gone undetected since May 2022 and could have let an attacker mint unlimited, undetectable counterfeit $ZEC.
The Zcash ecosystem launched an emergency fix on June 1, but investors worried that a hacker had possibly exploited the shielded pool without leaving any detectable trace over the past few years.
$ZEC/USD Daily Chart, Image By TradingView
Zcash price fell in the aftermath. Early Friday, its losses reached as much as 48% as it fell to a low of $250, having traded at a high of $645 just the day before.
What happened?
On June 3, Zcash Open Development Lab reported an Orchard vulnerability that has now been successfully remediated.
On May 29, a soundness vulnerability was discovered by Taylor Hornby, an independent security researcher conducting an ongoing protocol audit on behalf of Shielded Labs. A soundness vulnerability is a flaw that could allow the system to accept something it should reject.
A soft fork was activated on June 1 as part of a coordinated network upgrade in response to the issue. According to Zcash developers, this represents the second security-driven protocol upgrade in Zcash history since its launch in 2016.
Zcash developers maintain that there was no evidence that the vulnerability was exploited. They added that Zcash’s turnstile mechanism, which provides visibility into how much value can legitimately enter and leave shielded pools, protects the integrity of the 21 million supply cap.
Zcash rebounds
Zcash rebounded as much as 30% as $ZEC price rose to a high of $401 early Saturday. At the time of writing, Zcash was up 21% in the last 24 hours to $369. The move might be a “short squeeze” as traders expecting $ZEC price to drop further sought cover.
The price increase also follows notable crypto participants, including Dragonfly’s Haseeb Qureshi and Grayscale Founder Barry Silbert, highlighting the confusion about the recently patched Zcash bug.