A user of the layer-3 blockchain, Degen Chain, lost 90% of their funds during a bridge transfer to Base, an Ethereum layer-2 protocol, due to an internal bug.

On July 16, Degen Chain user Tempe.degen reported a loss of 785,000 DEGEN (DEGEN) tokens worth almost $5,000 during a bridge transfer, representing 90% of the total funds being transferred. Following an internal investigation, Degen Chain blamed a bug for the user’s misfortune.

The aftermath of lost funds

The protocol shared its intent to square off all users that have lost funds due to the bug in an X post:

“Bugs like this should never happen, especially when user funds are involved. If you’ve faced a similar problem, we’ll create a form to ensure everyone gets refunded.”

Degen Chain blamed its service providers for their “terrible service, " which resulted in outages and the loss of users’ funds.

Despite accusing its service providers of the bug in question, Degen Chain admitted to taking part of the blame for not proactively changing its providers or demanding a fix. They added:

“We’re doing a major shake-up in the coming weeks to ensure we get the best service possible. This won’t be a quick fix, but we will turn things around. Apologies to everyone affected.”

Check out Cointelegraph's guide to learn more about the layer-3 ecosystem and how it functions.

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Investors’ trust was broken

Despite Degen Chain admitting its fault and proposing a solution, community members on X shared their displeasure on how easily users risk losing their funds during bridge transfers.

Most critics believe that layer-3 ecosystems like the Degen Chain are not ready for mainstream acceptance. The common reasonings include constant multi-day outages,

Recently, Ethereum layer-2 scaling solution provider Optimism announced plans to onboard layer-3 applications on top of the OP Stack. The OP Stack is the open standard codebase that powers development on Superchain, but it “isn’t limited to L2 chain deployers and app builders,” the official announcement stated. 

However, “it can also be leveraged by an ecosystem of L3s,” the team added.

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