DeFi bridges: the weak link in the crypto fortress

DeFi bridges in turmoil – The ecosystem of decentralized finance (DeFi) evolved into a multi-chain ecosystem. Faced with this evolution, developers had to find ways to move funds between blockchains. This is how the bridges or bridges, linking various blockchains. Unfortunately, these are points of core vulnerabilityplagued by hacks.

Cross-chain bridge: the nightmare of DeFi

Since the end of 2020, many so-called bridge protocols have emerged. They have a simple mission: allow the exchange of funds between various blockchains.

Although essential for the proper functioning of DeFi, they face significant security problems.

Thus, according to a report published by Token Terminal, DeFi bridge attacks account for around 50% of attacks since September 2020.

Studies of DeFi attacks and the prevalence of DeFi bridge attacks.

In practice, almost $2.5 billion was stolen in attacks targeting DeFi bridges. In second place, well behind the bridges, we find the Lending protocol hacks, with $718 million stolen.

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Unforgiving Attacks

Due to their architecture, DeFi bridges are full of liquid. Therefore, attacks that target them most often result in colossal casualties.

Thereby, of the top 6 DeFi hacks, 5 targeted cross-chain bridges.

Last July, the Ronin Network bridge linked to Axie Infinity game was attacked. With $624 million stolen, this makes this attack the biggest DeFi hack to date.

This hack is closely followed by the PolyNetwork point attack that resulted in the loss of $611 million. Fortunately, negotiations with the attacker led to the return of almost all of the funds.

More recently, it was the turn of BSC Token Hub being the target of an attack. As part of this case, the attacker managed to steal the equivalent of 586 million dollars.

Among the most impressive hacks targeting a bridge we can also mention bridge attacks wormhole and Nomad Bridge which respectively resulted in the loss of 326 and 190 million dollars.

Vitalik Buterin’s scenario becomes clearer

Last January, when DeFi bridges were not yet such a phenomenon, Vitalik Buterin, the co-founder of Ethereum, was already warning about their lack of security.

He had already identified a major problem, namely the systemic risk of these bridges. Indeed, many bridges are deployed on more than a dozen different blockchains.

Therefore, attacking the bridge on one of the chains and then withdrawing the stolen funds to a second chain could lead to systemic contagion to the entire ecosystem.

Unfortunately, these flaws could be mitigated by placing more emphasis on security and auditing. A situation that delights however crypto security experts who are seeing their salaries skyrocket in the face of huge demand from the ecosystem.

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John R. Zepeda

I have extensive experience working as a content writer in the areas of cryptocurrencies and finance, where I create interesting pieces that both inform and engage their audiences.

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