Hydra is the layer-two scalability solution for Cardano. Prior to version 0.13.0, not signing and verifying `$\mathsf{cid}$` allows an attacker (which must be a participant of this head) to use a snapshot from an old head instance with the same participants to close the head or contest the state with it. This can lead to an incorrect distribution of value (= value extraction attack; hard, but possible) or prevent the head to finalize because the value available is not consistent with the closed utxo state (= denial of service; easy). A patch is planned for version 0.13.0. As a workaround, rotate keys between heads so not to re-use keys and not result in the same multi-signature participants.
The product does not verify, or incorrectly verifies, the cryptographic signature for data.