As of August 2022, there’s been $2 billion total in crypto losses, with 69% of stolen crypto funds originating from hacking protocols that bridge different blockchains. The cross-chain token bridge Nomad, lost $190 million in an exploit a few weeks ago and layer-1 blockchain bridging protocol Harmony Horizon lost $100 million after a hack in June. Earlier this year, Ronin lost $650 million and Wormhole lost $325 million. The Wormhole hack was caused by a fake deposit exploit. Attackers initiated a fake deposit and fooled the validators into approving a withdrawal of an equal size. What do these hacks have in common? These bridges all used Automated market maker technology (AMMs). The major hacks mentioned above could have been avoided using peer-to-peer (P2P)-powered bridges instead of AMMs and here’s why. P2P brides don’t rely upon complex smart contracts or liquidity pools. They use atomic swaps and order books, enabling cross-chain swaps to be completely trustless and decentralized without middlemen. Swaps are described as “atomic” because with each order, either the trade completes and two users exchange funds or the trade doesn’t complete and original funds are distributed back to the two users.
Full story : Cross-chain Bridging is Broken – But We Know How to Fix It.
