Degen Chain Accuses Service Provider of Withholding Rollup Keys

Degen Chain, a Layer-3 blockchain protocol, announced that it wished to migrate from its service provider Conduit. Degen claimed the firm had withheld its roll-up keys for months and hoped public outcry would allow a clean break.

Degen’s difficulties with an uncooperative partner highlight the importance of self-custody in the blockchain space.

Degen’s Turbulent Year

Degen Chain, an Ethereum-based Layer-3 blockchain protocol, announced today that it would attempt migrating to a new service provider. The announcement stressed that the firm had tried to find a new solution for several months but would be forced to take this radical option. Degen’s developers accused their provider, Conduit, of maliciously holding their rollup keys.

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Degen entered the crypto scene in March of this year and set transactions-per-second records in the Ethereum ecosystem by April. However, this metric did not translate well into token valuation, and its price significantly dropped from an early spike. The following month, a public dispute with Conduit disrupted Degen’s activities for 11 hours, heralding a total price collapse.

According to today’s announcement, the May stoppage was not an isolated incident. Degen claimed that a subsequent unannounced “system upgrade” from Conduit caused 54 hours of downtime and slaughtered the project’s reputation for speedy transactions. Since then, Degen has been trying to negotiate a clean break from Conduit, but it’s proven uncooperative.

Captive Rollup Keys

Specifically, Degen accused Conduit of holding its rollup keys hostage, demanding “a new contract absolving them of responsibility.” Degen’s developers described a series of hostile actions in this dispute, as their service provider rejected efforts to reimburse customers’ downtime losses and actively hindered a possible migration.

In fact, the firm did not announce that the migration was taking place but rather issued a “plea to the community” to facilitate it. As long as Conduit holds its rollup keys, it cannot upgrade its chain or finalize a migration.

Read More: What is a Private Key in Crypto?

This incident highlights the importance of private key ownership in the crypto space. Once Conduit stopped cooperating in the early stages, it should’ve been clearer to Degen that this could jeopardize their entire operation. Andre Cronje, co-founder and architect at Sonic Labs, stressed the replicable nature of this incident via a social media post.

“First it was ‘not your keys, not your coins,’ now it’s ‘not your blockchain, no one’s coins.’ Obviously… part of the learning/teething process, and I might very well be wrong about “L2 as a service” offerings, but personally, I was always a ‘write it yourself instead of using a library’ kind of guy. Anyway…[it] won’t be an isolated incident,” Cronje claimed.