Hack-Prone Blockchain Bridges Expose DeFi’s Achilles Heel
If 2018 was the Year of the Hack for centralized crypto exchanges, decentralized blockchain bridges seem destined to win that honor this year. Over $1.9 billion was stolen in cross-chain hacks in the first half of 2022, according to a new blog post by crypto analytic firm Chainalysis. Cross-chain bridges have come under fire in recent weeks for their vulnerability. At their core, bridges allow users to exchange one token for another, say BNB (Binance’s token) for Ethereum; they are the key to expanding operability across blockchains. “Having that interoperability is crucial,” says Kim Grauer, head of research at Chainalysis. But in order to function, bridges must hold large amounts of both tokens. Such liquidity pools make them enticing to hackers. Bridges “allow for blockchains to talk,” says Grauer. “But we’ve also created these honey pots for malicious actors.” “Regardless of how those funds are stored–locked up in a smart contract or with a centralized custodian–that storage point becomes a target,” she adds.