Cross-chain bridge hacks accounted for 69% of all stolen cryptocurrencies in 2022, amounting to $2 billion in losses, according to a new report.
The report came from blockchain analytics firm Chainalysis on August 2, noting that there were 13 separate token bridges. khaki this year, the latest being the $190 million Nomad Bridge exploit.
The first quarter of 2022 was by far the quarter with the most cryptocurrency theft since 2021, largely due to the Ronin Bridge attack in late March that resulted in the theft of $624 million in Ether (ETH) and Circle USD ( USDC).
Since yesterday’s Nomad Bridge exploit, roughly $2 billion has been stolen from internet bridges in 2022. Read our blog to find out what makes these protocols vulnerable and what the industry can do about it. https://t.co/WLo62H6NFe pic.twitter.com/CZRnqrPikh
— Chain Analysis (@chainalysis) August 2, 2022
Cross-chain bridges, also known as blockchain bridges, are designed to transfer cryptocurrencies from one blockchain network to another.
Chainalysis explains that while bridge designs vary, users typically deposit their tokens from the same chain into the bridge protocol, which are then fixed in a contract. The user is then given the equivalent of a parallel token on another chain.
According to the Chainalysis report, bridges are often targeted because they “represent the central storage point of the funds that support the ‘bridge’ assets on the host blockchain.”
“Whether these funds are stored in a smart contract or with a centralized custodian, that storage point becomes the target.”
According to some experts, an effective bridge design is still in its infancy, and some developers still have relatively little understanding of security protocols, making their protocols vulnerable to exploitation by hackers.
In a video from July 22, posted on TwitterAlmost two weeks before the recent attack, Nomad founder James Prestwich says it will be “at least another year or two before blockchain security models become familiar enough to build defense as a standard.”
“In internetwork systems, we haven’t had that much experience with attacks yet, people don’t know what common attacks are and so they don’t defend against them.”
Centralized exchanges were once a favorite target for hackers, but advances in security protocols have led to a decline in the number of successful cyberattacks, according to Chainalysis.
The blockchain analytics firm stressed that crypto services, including bridges, should start investing in security updates and training as early as possible.
“An important first step towards solving problems like this could be an extremely thorough code audit, which will become the DeFi gold standard for both these build protocols and for the investors evaluating them. Over time, the most reliable and secure smart contracts can serve as templates for developers.”
Credit : cointelegraph.com