From theblock by Daniel Kuhn

There are many things in life that cannot be controlled, but public/private key pairs are not usually included in that list. In fact, blockchains are designed so that anyone can maintain ownership over their assets. 

Unfortunately for DEGEN L3, however, this appears not to be the case.

In a blog post on Thursday, the project’s founders disclosed they’ve been embroiled in a dispute with third-party infrastructure provider Conduit since August over access to their own blockchain. 

The unfolding conflict between DEGEN L3 and Conduit is a stark reminder of the risks inherent in using third-party infrastructure in blockchain projects. While blockchain technology promises decentralization and control over one's assets, DEGEN's struggle highlights the dangers of outsourced dependencies that can jeopardize ownership and operational continuity. This case underscores the importance of retaining control over essential elements like key management to avoid costly setbacks and potential legal battles.

Airing of grievances

“Conduit holds our rollup keys and has refused to upgrade our chain,” the Degen team wrote in a post titled “A Frustrated Migration and a Plea to the DEGEN Community,” that essentially outlines an alleged hostage situation. 

According to the team, in May, Conduit allegedly pushed out an unannounced software upgrade that caused a 54-hour period of downtime that cost Degen users $160,000 in lost funds. This was a black eye for the project that was once celebrated as the Ethereum  ETH +5.15%

-based network with the highest transaction count per second.

After the incident, Degen contacted Conduit to make their users whole — a proposition that was allegedly declined. Instead, Conduit offered Degen six months of free service. At that point, the Degen team decided to migrate to a new contract and use a different service provider.  

As the team tells it, after Degen notified Conduit it was not renewing its contract, the infrastructure provider confiscated Degen’s sequencer fees and deleted its block explorer data. Worst of all, Conduit has refused to hand over the Gnosis Safe multi-signature keys needed for Degen to deploy its new smart contracts and activate the new infrastructure provider’s sequencer.