Chia Network said that due to the vulnerabilities identified during the audit, it decided to issue more secure CAT2 instead of CAT1 tokens.
The developers clarified in a blog that the decision to issue a new token was made in connection with a discovered security vulnerability in the protocol after an external auditor of Trail of Bits identified flaws in the CAT1 token standard. The company warned that it will stop the use of the CAT1 token on July 26 at 20:00 (UTC) after the creation of block #2 311 760 and launch CAT2 on the blockchain.
Chia's VP of Products, Paul Hainsworth, said it took quite some time to investigate the vulnerability and make a decision:
“We had to be absolutely sure that this is a serious vulnerability. Now we need to complete the life cycle of CAT1, fix it and upgrade to CAT2.”
Many blockchain protocols now employ auditors to look for weaknesses, but token reissues are infrequent. Hainsworth emphasized that, as a “blockchain focused on businesses and institutions,” Chia Network conducts regular system reviews.
Chia created CAT to issue tokenized versions of stocks, bonds, and other assets on top of the Chia blockchain. According to Hainsworth, the tokens are separate from the native XCH cryptocurrency of the Chia blockchain:
"CAT is an artifact built on top of XCH, but it's a separate asset type altogether."
The update will not affect XCH, a company spokesperson says. Although Chia encourages holders to cancel current orders to sell XCH for CAT1 in order not to buy “worthless tokens.”
Recall that the arrival of the new Chia project on the market was marked by a shortage of SSDs in Asia, they were massively bought by miners for the sake of mining the project’s cryptocurrency.
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