Cardano advances Leios testnet as ADA tumbles, wallet hacked

Input Output launched the Musashi Dojo public testnet to run the Ouroboros Leios design under realistic and adversarial conditions. At the same time, the Van Rossem upgrade moved into Cardano’s governance process. Market activity diverged from engineering work as ADA traded near $0.14 and wallet provider SecondFi reported a large exploit.

Leios introduces a second block type to operate alongside the existing Praos blocks. Input Output estimates the architecture could raise consensus-layer throughput by five to 20 times. The Musashi Dojo testnet does not use real ADA and is built to test, parameterize and validate the design. The testnet will proceed through five phases named Earth, Water, Fire, Wind and Void. Developers and independent stake pool operators have been asked to stress the network, identify weaknesses and help set parameters before any decision about mainnet deployment.

The Van Rossem upgrade, formally Protocol Version 11, entered the governance process after an initiation proposal submitted on June 16 during Epoch 637. Van Rossem is an intra-era hard fork intended to add features without moving the network into a new development era and to prepare infrastructure for later protocol transitions. Data from network operators showed about 86% of block production was running node version 11 as Epoch 638 closed, while exchange readiness measured by liquidity was about 50.24%. The upgrade remains subject to governance approval and has not been activated on mainnet.

ADA traded near $0.14, its lowest price since 2020, and has fallen more than 55% year to date. Market-cap rankings place ADA at risk of dropping out of the top 20 crypto assets if the decline continues. Trading data on major exchanges showed about 2.1 long accounts for every short on one platform and roughly 1.46 long accounts per short on another. Among top traders on a large exchange the long-to-short account ratio was about 2.49, while the aggregate position ratio for that exchange’s top traders was about 0.9754, leaving that group marginally net short. Those figures reflect larger numbers of small long positions and fewer, larger short positions.

Parts of Cardano’s application ecosystem have contracted this year. Projects including TapTools and JPG Store have scaled back or shut down operations, reducing on-chain activity and developer momentum.

SecondFi, the successor to the Yoroi wallet, disclosed a wallet-generation failure that exposed private keys. The company reported roughly 16 million ADA stolen across 374 addresses, about $2.4 million at recent prices. Company engineers initiated emergency measures and secured about 129 million ADA before attackers could drain those funds. Recovered assets are being transferred to an independent third-party custodian to be held on behalf of affected users. SecondFi said it identified the source of the vulnerability, patched accounts that had not been affected, warned customers not to restore compromised recovery phrases in other Cardano wallets, hired an external accounting firm to audit recovered funds and opened a claims process for victims.

Mitchell Amador, CEO and founder of the security firm Immunefi, noted that attackers shifted focus to places where keys are held in bulk, including exchanges, custodians and wallet-generation code. He added that key compromises inside DeFi protocols fell to 8.1% of losses by 2025 as teams hardened key management.

Cardano’s broader research program includes projects named Peras, Chronos, Crypsinous and Minotaur. Peras aims to speed transaction finality; Chronos aims to reduce dependence on external time synchronization; Crypsinous focuses on privacy; and Minotaur explores a consensus design that could draw security from multiple sources. These projects are at various stages of research and testing, and no firm deployment dates have been announced.

Developers say the immediate priorities are repeated Leios testing and securing wide participation in the Van Rossem transition by exchanges, wallets and stake pool operators. Any mainnet integration will depend on successful testing and coordinated infrastructure readiness.