Attacks on cross-chain bridge protocols account for 69% of total crypto funds stolen this year
Cross-chain bridge hacks have brought fraudsters 69% of the total crypto stolen in 2022 so far, amounting to $2 billion in losses, according to a new Chainalysis report. The analytics registered 13 separate token bridge hacks this year — the most recent being the $190 million Nomad Bridge exploit.
Moreover, Q1 2022 saw the largest amount of crypto stolen since 2021, due mainly to the Ronin Bridge Attack in late March, which brought malefactors $624 million in Ether (ETH) and USD Coin (USDC).
Cross-chain bridges are designed to transfer cryptocurrencies from one blockchain network to another. Their vulnerabilities make bridges the focal point of hacker attacks. According to the Chainalysis report, bridge protocols are often targets because they “feature a central storage point of funds that back the ‘bridged’ assets on the receiving blockchain”. Besides, the more value flows through cross-chain bridges, the more attractive they become for hackers.
In addition, effective bridge design is still an unresolved technical challenge. Some developers have relatively little understanding of security protocols, making their products vulnerable to exploitation by hackers.
The good news is that cross-chain bridge services can leverage the transparency of blockchain technology to investigate the flow of funds and prevent attackers from cashing out their gains. Nevertheless, cryptocurrency services, including bridges, should start investing in security upgrades and training sooner rather than later. In particular, extremely rigorous code audits should become the gold standard of DeFi, both for those building protocols and for the investors evaluating them.