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.