Cross-Chain Crypto Bridge Hacks Hit $2 Billion: Chainalysis

Blockchain sleuths Chainalysis estimate that more than two-thirds of all stolen funds in the crypto space came from cross-chain bridge hacks this year.

These types of attacks refer to exploits or hacks that occur on so-called bridging protocols linking different blockchains.

In a recent reportthe company said the theft from the bridges amounted to $2 billion in stolen funds, posing a “significant threat” to the credibility of blockchain technology.

This analysis follows The Nomadic Monday Hack, which saw $200 million wiped from the bridge platform. Nomad works as a pathway between different blockchains, allowing investors to move their funds between blockchains such as Ethereum, avalancheand Moonbeam (GLMR).

Stolen quarterly value. Source: Channel Analysis.

The nomadic breakage also represents the seventh major hack for crypto bridges this year, asking the question: What makes it such a glaring target?

Crypto Bridges and Liquidity

According to Arda Arkantura, a threat analyst at crypto data and compliance firm Elliptic, the problem with cross-chain bridges is their liquidity.

“You manage a token on one side of the blockchain and then unlock it on the other side. That means you have a lot of cash and smart contracts with funds stored on it,” Arkantura explains. “In crypto, when something is liquid, it’s lucrative.”

These cross-chain bridges have been so lucrative that cross-chain hacks accounted for 13.5% of all flights within decentralized applications (dApps), according to Elliptic.

In March, blockchain gaming company Axie Infinity also suffered a $622 million hack as its Ronin side chain, which connects it to the Ethereum network, succumbed to the theft. A month before the Ronin heist, Wormholea bridge that connects Ethereum and Solana, was deprived of $320 million.

Chainalysis also suggests that cross-chain bridges have become a primary target for hacks by activists or terrorists, with criminals from North Korea stealing around $1 billion worth of crypto this year.

The irony with cross-chain bridges is their prevalence in the Challenge ecosystem. By centralizing smart contracts with funds and transactions written on them, they provide a focal point for criminals to exploit.

“It’s an interesting paradox,” says Arkuntura.

“Some people will say that centralizing smart contracts allows them to solve problems immediately [on the bridge]. On the other hand, centralization makes things much easier for illicit actors,” he added.

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