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.

Stay up to date with crypto news, get daily updates delivered to your inbox.

About Johanna Gooding

Check Also

Kakarot Game Gets New Bardock DLC Story

The action role-playing game Dragon Ball Z: Kakarot is getting a new DLC storyline centered …