Saga Protocol Halts SagaEVM After $7M Stablecoin Exploit; SAGA Slides 14%

Bridge Breach Forces Network Pause

Saga Protocol suspended its SagaEVM environment late Wednesday after security systems detected an unauthorized funds transfer totaling nearly $7 million. The exploit, which targeted the network’s bridge infrastructure, forced the team to halt block production at height 6,593,800 to prevent further drainage. The native token, SAGA, reacted immediately, dropping 14% to trade near $0.054 as liquidity exited the ecosystem.

The breach involved the unauthorized minting of the protocol’s native stablecoin, Saga Dollar (D). According to statements released by Saga on X, the attacker exploited a vulnerability in the chainlet’s bridge contract to mint unbacked tokens, which were subsequently bridged to the Ethereum mainnet and swapped for ETH. The exploit did not compromise the Saga mainnet (SSC) or its validator set, but the SagaEVM chainlet remains frozen.

SagaEVM remains paused while we finalize the results of our investigation into the Jan 21 exploit. $7M of USDC was bridged out and converted to ETH.

Liquidity Drain and Depeg

The attack decapitated the network’s total value locked (TVL), which plummeted from $37 million to roughly $16 million in under 24 hours. The algorithmic stablecoin ‘D’ lost its peg entirely, collapsing to $0.75 as the backing collateral was siphoned. Oku Trade, a DEX interface used on Saga, confirmed the exploit originated in Saga’s core infrastructure rather than the exchange layer.

This incident marks one of the first significant bridge exploits of 2026. While the specific vulnerability remains under forensic review, the mechanism, minting unbacked assets to drain valid liquidity, mirrors the ‘infinite mint’ vectors that plagued cross-chain protocols in the previous cycle. Saga has engaged centralized exchanges to blacklist the attacker’s address (0x2044…c6ecb), though the funds have largely been converted to ETH.