The unbearable weight of defi: the cross chain bridge has become a "hacker ATM"
When game dapps such as axie infinity and defi kings maintain the whole ecosystem such as ronin and harmony, network protocols such as fantom or avalance have made a lot of money in the wave of defi.These blockchains have become important substitutes for Ethereum's gasoline costs and relatively slow transaction time. It is more urgent than ever to find a simple way to move assets between protocols on different blockchains.
This is the birthplace of blockchain cross chain bridge.
Due to the application of Multi Chain scenarios, the total locking value of all DFI dapps soared. As of May 2022, TVL in this industry is estimated to be USD 111.28 billion. The huge assets locked and bridged in these defi dapps have attracted the attention of malicious hackers. The latest trend shows that attackers may have found weak links in blockchain bridges.
According to rekt database, $1.2 billion of encrypted assets were stolen in the first quarter of 2022, accounting for 35.8% of the funds stolen in history according to the same source. Interestingly, at least 80% of the lost assets in 2022 were stolen from the chain bridge.
One of the most serious attacks occurred in March, when ronin bridge was hacked and lost $540 million. Previously, the qubit finance bridge of Solana wormhole and BNB chain was stolen for more than $400 million in 2022. The biggest hacker attack in encryption history occurred in August 2021, when the polynetwork bridge was stolen $610 million, but the stolen funds were recovered.
Chain bridges are one of the most valuable tools in the blockchain industry, but their interoperability poses important challenges to the projects that build them.
Understanding blockchain bridges
Similar to Manhattan Bridge, blockchain bridge is a platform connecting two different network protocols, which can realize the cross chain transmission of assets and information from one blockchain to another.In this way, cryptocurrency and NFT will not be isolated in their own chain, but can "bridge" across different blockchains, so as to increase the utilization of these assets.
Thanks to the existence of chain bridge, bitcoin can be used in smart contract based networks for the purpose of defi, or NFL and NFT can be bridged from flow to Ethereum for subdivision or as collateral.
Of course, there are other different ways to transfer assets. such as Lock and mint, as its name suggests, works by locking the original assets in the sender's smart contract, while the receiving network casts a copy of the original token on the other side.IfEthereumIf you bridge from Ethereum to Solana, the ether coin in Solana is only a copy, not a token itself.
Locking and coinage mechanism | source: makerdao
Although the lock and mint method is the most popular bridging method at present, there are other methods to complete asset transfer,For example, "burn and mint" or "automatic swap" of asset exchange between two networks executed by smart contract。 Connext (formerly known as xpollinate) and cbridge are chain bridges that rely on atomic swaps.
From a security perspective,Chain bridges can be divided into two categories: trusted and untrusted. Trusted chain bridge is a platform that relies on a third party to verify transactions,But more importantly, it can act as the custodian of bridging assets. Almost all blockchain specific bridges can find cases of trusted bridges, such as binance bridge, polygon POS bridge, wbtc bridge, avalanche bridge, harmony bridgeTerra Shuttle bridge, and dacps such as multichain (formerly known as anyswap) or just cryptos of Tron.
On the contrary, the platform that relies solely on smart contracts and algorithms to manage assets is a chain bridge to trust。 The security factor of de trust chain bridge is related to the underlying network where the assets are bridged, that is, where the assets are locked.Trust free chain bridges can be found in rainbow bridge of near, wormhole of Solana, snow bridge of Polkadot, Cosmos IBC, hop, connext and celer.
At first glance, the de trust chain bridge seems to provide a safer option for transferring assets between blockchains. However, both trusted and untrusted chain bridges face different challenges.
Limitations of trusted and distrusted chain bridges
Ronin chain bridge is a centralized trusted operation platform,The chain bridge uses a multi signature wallet to host bridge assets. In short, a multi signature wallet is an address that requires two or more encrypted signatures to approve a transaction. In ronin's case, the side chain had nine verifiers and needed five different signatures to approve deposits and withdrawals.
Other platforms use the same method, but the risk dispersion is better. For example, polygon relies on eight validators and requires five signatures. The five signatures are controlled by different parties. As far as the sky Mavis team is concerned, it has four single points of failure. After hackers control four sky Mavis signatures at one time, they only need one signature to approve the withdrawal of assets.
On March 23, the attacker took control Axie The signature of the Dao, which is the last part required to complete the attack. In the second largest encryption attack in history, 173600 Eth and 25.5 million usdc were lost from ronin's custody contract through two different transactions. It is also worth noting that the sky Mavis team found the hacker attack nearly a week later,This shows that ronin's monitoring mechanism is at least imperfect, which also reveals a defect of this trusted platform.
Although there is a fundamental flaw in centralization, due to errors and vulnerabilities in software and coding, the de trusted chain bridge is also vulnerable to attack.
Solana wormhole is a platform for cross bridge transactions between Solana and Ethereum, was attacked in February 2022 and $325 million was stolen due to a loophole in Solana's escrow contract. A vulnerability in the wormhole contract allows a hacker to design a cross chain verifier. The attacker sent 0.1 eth from Ethereum to Solana to trigger a set of "transmission messages" to induce the program to approve the transfer of assumed 120000 eth deposits.
Due to defects in contract classification and structure, the wormhole hacking incident occurred after poly network stole $610 million in August 2021.The cross chain transactions in the DAPP are approved by the centralized node group called "Guardian" and verified on the receiving network through the gateway contract. In this attack, hackers can gain the privilege of being an administrator and cheat the gateway by setting their own parameters.Attackers repeat this process in Ethereum, binancde, Neo and other blockchains to extract more assets.
All bridges lead to Ethereum
Ethereum is still the most important defi ecosystem in the industry, accounting for nearly 60% of TVL in the industry.At the same time, the rise of these different network protocols as substitutes for Ethereum defi DAPP has also triggered cross chain activities of blockchain bridges.
The largest bridge in the industry is the wbtc bridge, which is hosted by bitgo, kyber and Republic protocol, the teams behind renvm.Since bitcoin token is technically incompatible with blockchain based on smart contract, wbtc bridge "packages" the native bitcoin, locks it in the bridge hosting contract, and casts its erc-20 version on Ethereum. The bridge is very popular in defi summer (which has experienced amazing growth in the defi market since the summer of 2020, so it is called "defi summer") and now holds bitcoin worth about $12.5 billion.Wbtc allows BTC to be used as collateral for dapps such as AAVE, compound and maker, or to generate revenue or earn interest in a variety of defi protocols.
Multichain, formerly known as anyswap, is a DAPP that provides cross chain transactions to more than 40 blockchains through a built-in chain bridge.Multichain holds $6.5 billion based on all connected networks. However, Ethereum's fantom bridge is by far the largest pool, locking in $3.5 billion. In the second half of 2021, the proof of stack network became a popular area of defi because of its attractive revenue farms, including FTM, various stable currencies or wth found on spokyswap.
Unlike fantom, most L1 blockchains use independent direct bridges to connect to the network.Avalanche bridge is mainly hosted by avalanche foundation and is the largest L1 & lt; > L1 bridge. Avalanche is one of the most powerful areas of defi because it has dapps including Trader Joe, AAVE, curve and platypus finance.
Binance bridge also stands out with $4.5 billion in locked assets, followed by Solana wormhole, whose TVL is $3.8 billion.
Similarly, for TVL, polygonArbitrum And optimism are also one of the most important bridges.The polygon POS bridge is the main entry point between Ethereum and its side chain. It is the third bridge, hosting nearly $6 billion. At the same time, the mobility of chain bridges on popular L2 platforms such as arbitrum and optimization is also rising.
Another bridge worth mentioning is the near Rainbow Bridge, which aims to solve the famous three dilemmas of interoperability (decentralization, capacity expansion and security). This platform connecting near and Aurora with Ethereum may provide a valuable opportunity to realize the security of the de trust chain bridge.
How to improve cross chain security
As two methods of hosting bridge assets, trusted bridge and de trusted bridge are prone to basic and technical defects. Nevertheless, there are still some methods to prevent and reduce the impact of malicious destruction of blockchain by hackers.
In the case of trusted chain bridge, it is obvious that it is necessary to increase the proportion of required signers and distribute multiple signatures in different wallets.Although the de trusted chain bridge eliminates the risks associated with centralization, there are still risks of vulnerabilities and other technical limitations, as shown in the vulnerability exploitation cases of Solana wormhole or qubit finance. Therefore, it is necessary to implement off chain actions to protect cross chain platforms as much as possible.
Cooperation between agreements is necessary. Web3 space is characterized by its community unity, so let the smartest people in the industry work together to make the space a safer place。 Animoca brands, binance and other Web3 brands raised $150 million to help sky Mavis reduce the financial crisis of ronin bridge due to hacker attacks. Through joint efforts and cooperation, the interoperability of multi chain can be raised to a new level in the future.
Similarly, coordination and cooperation with the chain analysis platform and CEX can help track and mark stolen tokens.This situation may inhibit the enthusiasm of criminals in the medium term, because the gateway to cash cryptocurrency into legal tender should be controlled by the KYC program in the established CEX. Last month, two 20-year-old young people were punished by law after committing fraud in the field of NFT. Similarly, it is fair to require the same punishment for hackers who have confirmed their identity.
Auditing and vulnerability bounty are also another way to improve the security of any Web3 platform, including chain bridge.Certification organizations such as certik, chainsafe and blocksec help make Web3 interactions more secure. All chain bridge activities shall be audited by at least one certification organization.
At the same time, the vulnerability bounty program creates synergy between the project and its community.White hackers play a crucial role in identifying vulnerabilities before other hackers carry out malicious attacks. For example, sky Mavis recently launched a $1 million vulnerability bounty program to enhance the security of its ecosystem.
The proliferation of L1 and L2 solutions challenges the ecosystem of Ethereum DAPP as a whole blockchain system. Their proliferation has spawned the demand for mobile assets between networks through cross chains. This is the essence of interoperability and one of the pillars of Web3.
For all that,The current interoperable scenario relies on cross chain protocols rather than Multi Chain methods, which vitalik issued at the beginning of this year.Although the need for spatial interoperability is obvious, more powerful security measures need to be taken in such platforms.
Unfortunately, challenges will not be easily overcome.Both trusted and untrusted platforms have design defects. These inherent cross chain defects have become obvious.So far, more than 80% of the losses in the US $1.2 billion hacker attacks have been stolen through the flawed chain bridge.
In addition, with the increasing value of the industry, hacker technology has become more and more powerful. Traditional cyber attacks such as social engineering and phishing attacks have become the development history of Web3 in the past.
The Multi Chain Approach in which all token versions correspond locally to each blockchain is still far away.Therefore, the cross chain platform must learn from the past experience and lessons, strengthen process supervision, and minimize the success of hacker attacks.