Why crypto bridges are being hacked

A bridge too far?

One of the challenges for the crypto industry is how many blockchains there are and how complex it is to move over them. This has led to the growth of bridges for people to send tokens across chains. But these bridge tools have been attacked by hackers, which has led to big losses. Some of the largest DeFi notches to date have involved bridges.

Tthe future is multichain. This means that bridges will only become more important.

• Bitcoin is singular: it has one token held on a blockchain. However, many of the blockchains that followed are designed to support multiple tokens, and many cryptocurrencies aim to run on more than one blockchain. USDC trades on eight blockchains, while chains such as Solana and Ethereum are designed with support for multiple currencies in mind.
• Many in the industry believe it is inevitable that there will be more blockchains evolving, each emphasizing different strengths such as gaming, commerce, NFT, mobile or payment.
• But a lot is at stake. If the crypto disappears on one side of a bridge due to a hack, it can destabilize the system. When the Wormhole bridge was hacked, the parent company, Jump Trading, replaced the stolen ether to keep things running.

Attacks on bridges look like other cryptohacks. Hackers exploit code errors or, more frighteningly, the basic design of a network.

• In the Wormhole incident, hackers exploited a security problem in smart contract code to get away with $ 325 million.
• The recent $ 100 million hack of Harmony’s Horizon Bridge was apparently the result of social construction to obtain the necessary electronic signatures to authorize a transaction.
• In the case of Axie Infinity, social engineering played a role, but hackers also exploited a weakness in the system of validator nodes. Four of the five needed to approve a transaction were controlled by Axie creator Sky Mavis, giving hackers an opening to take over things.

Although consumers can get past the trust issues created by the hacks, there are other obstacles. Crossing chains is still a nightmare for the user interface, with more wallets needed and something technically sophisticated.

• This can be the ultimate challenge for bridges, even if safety is eventually resolved. Until it becomes easier to build bridges between chains, widespread cryptoadoption will be prevented.
• Some Web3 companies are working on ways to make bridge building easier. Transak aims to make it seamless for users who have, for example, ether, to play a game on the Solana blockchain.

There are trade-offs for how bridges are designed between speed, cost and safety. Safer bridges can be slow to complete a transaction. In the long run, however, this will mostly be a headache for developers. The ultimate crypto bridge can be one that consumers do not even know they have crossed.

– Tomio Geron (e-mail | twitter)

A version of this story first appeared on Protocol.com. Read it here.

SPONSORED CONTENT FROM GOOGLE PLAY

Android and Google Play are blank screens. Developers are the artists who paint on them: Over the last two years, there has been a great deal of debate between life and livelihood. Many people had to choose between the two. Those who could work from home did not have to make the difficult choice because we could have both life and livelihood – and technology was the reason why people could have both.