A report from Chainalysis shows that $2B crypto was hacked from a cross-chain bridge this year There have already been 13 different bridge attacks in 2022, with the $190 million Nomad Bridge exploit being the most recent.
According to a recent report, cross-chain bridge hacks were responsible for 69 percent of all cryptocurrency losses in 2022, or $2 billion in losses. According to a report by Chainalysis a blockchain analytics company, there have been 13 different token bridge hacks this year, with the most recent being the $190 million Nomad Bridge flaw.
In 2022 Q1 most amounts of crypto were stolen since 2021, Ronin bridge attack in march saw $624 million in Ethereum and circle USD stolen.
Following last night’s exploit of the Nomad Bridge, an estimated $2B has been stolen from cross-chain bridges so far in 2022. Read our blog to learn what makes these protocols vulnerable and what the industry can do about it. https://t.co/WLo62H6NFe pic.twitter.com/CZRnqrPikh— Chainalysis (@chainalysis) August 2, 2022
Bridges between different blockchain networks, also known as cross-chain bridges, are used to transfer digital assets. Despite the fact that bridge designs can differ, according to Chainalysis, users deposit their tokens from one chain to the bridge protocol, after which they are locked into a contract. After that, the user receives what would be a parallel token in a different chain.
Related: Harmony loses $100M in Bridge Hack
Bridges are frequently attacked because they “feature a central storage point of funds that back the ‘bridged’ assets on the receiving blockchain,” according to the Chainalysis report. “That storage point becomes a target,” regardless of whether the money is kept with a central custodian or in a smart contract.
Effective bridge design is still in its infancy; it’s not efficient enough, according to some experts developers still only have a basic knowledge of security protocols, leaving their systems open to hacker attacks. As a result, people don’t know how to defend against common attacks in cross-chain systems because we haven’t yet attained that level of attack expertise.
Centralized exchanges were once a favorite target of hackers, but according to Chainalysis, advancements in security protocols have resulted in a decrease in successful cyberattacks. The blockchain analytics company has emphasized the need for bridges and other cryptocurrency services to begin investing as soon as possible in security enhancements and training.
Related: How Nomad Bridge HACKED?
Extremely thorough code audits could become the gold standard of Defi, serving as a useful first step in addressing problems like these for both the building protocols and the investors assessing them. The most reliable smart contracts will eventually be able to be used as building blocks by developers.