EXPLAINING CRYPTO’S BILLION-DOLLAR BRIDGE PROBLEM

On March 23rd, the Ronin blockchain network underlying the pop NFT-driven game
Axie Infinity
was hit with a hack that saw the attackers walk abroad with an heart-popping $625 million in cryptocurrency.

The Ronin hack was the largest amount of money that had always been stolen from the type of service chosen a “bridge,” which connects i blockchain to some other and then that value can be sent betwixt them. Unfortunately, it was far from the just hack to hit a bridge: less than 2 months previously, another span platform called Wormhole was exploited for close to $325 million, and about six months earlier that, more than $600 million was stolen from some other cross-chain bridge called Poly. (In a surprising twist, the hacker subsequently returned Poly’s stolen funds.)

In curt, bridges are the weak point in a lot of cryptocurrency systems, and hackers are targeting them for more than than $1 billion in little over a year. And so it’s worth laying out exactly what they are, why they’re important, and how crypto companies can endeavor to plug the billion-dollar hole in their pockets.

If you lot don’t have time to read further, the short answer to the beginning part is “yes, they’re vulnerable simply maybe less so over time.” For the second part, the story is more circuitous.

(We’re bold yous know what a blockchain is already; if not, you lot tin can start hither.)

So what is a “blockchain bridge”?

Essentially, it’south a system for connecting different blockchains, allowing users to commutation ane kind of money or token for another. Every cryptocurrency runs on its ain blockchain: in that location’s Bitcoin, Ethereum, and newer currencies similar Tether, Ripple, Solana, and and then on. At that place’south no unproblematic way for these unlike blockchains to interact — they might all utilize the concept of “addresses” to send and receive currency transactions, but yous tin can’t send ETH directly to a Solana address.

A blockchain bridge is what developers take built to make that crossover a piddling smoother. If you lot’re holding ETH and y’all demand Solana’s SOL to sign up for a game, you can ship your ETH into a bridge, get SOL in render, and use the aforementioned method to convert back when you’re done playing.

Why are bridges peculiarly vulnerable to hacks?

The curt answer is that they’re handling a lot of complex requests and holding a lot of currency — and unlike the blockchains themselves, there’s no standard for how they’re supposed to keep everything secure.

Movie a blockchain span as an actual bridge between ii islands. Each island has different rules virtually the type of auto y’all can bulldoze (maybe in that location’s an EV island and a regular gas island), so they won’t let you drive your car from i side to the other direct. In fact, you lot drive up to i side of the span, leave your vehicle in a parking garage, walk beyond, and pick upwards a rental car on the other side. And then, when you lot’re done driving around the other island, you lot bring your rental back to the bridge, walk beyond, and they mitt you lot the keys to your motorcar.

That means for every rental car driving around the isle, at that place’southward another car parked in the garage. Some are stored for hours, others for days, others for months, only they’re all merely sitting there, and the visitor that operates the bridge has to keep them all safe. Meanwhile, other unscrupulous people know exactly how many cars are in the garage and are looking for ways to steal them.

Functionally, this means bridges are receiving incoming transactions in ane blazon of cryptocurrency, locking it upwardly as a deposit, and releasing an equivalent amount of cryptocurrency on another blockchain. When bridges get hacked, the assailant is able to withdraw money from ane side of the bridge without putting anything in the other side.

Bridges are particularly tempting targets because of all the complex code, creating lots of opportunities for exploitable bugs. As CertiK founder Ronghui Gu explains: “If you’re trying to create a span between Northward different cryptocurrencies, the complexity of that is Northward squared,” — which means Northward more chances for bugs to creep in.

Crucially, these different cryptocurrencies aren’t simply different units of money: they’re written in different programming languages and deployed in different virtual environments. Figuring out how these things should collaborate is very hard, especially for on-chain bridges that convert between multiple unlike coins.

Have bridges made cryptocurrency less secure overall?

Probably non. Attackers are targeting bridges right now because they’re the weakest signal in the system — but that’south partially because the industry has washed a good job securing the rest of information technology. Kim Grauer, manager of research at Chainalysis — a company that has produced research on DeFi thefts — told
The Verge
that bridge hacks are taking the place of the previous generation of dissentious hacks against exchanges like Coincheck, BitMart or Mt Gox.

“If you looked at our ecosystem just a few years ago, centralized exchanges were the main target of hacks. Every hack it was, ‘Centralized exchange goes down again,’ and the industry worked difficult to accept solutions that allowed us to overcome these hacking bug,” she says. “Nosotros’re seeing a lot of DeFi hacking, but I think the pace of it is actually slowing downward. Definitely the rate at which this hacking is going on can’t continue for the industry to grow.”

Isn’t the whole point of the blockchain to prevent this kind of attack?

The problem is that many bridges aren’t on the blockchain at all. The Ronin span was ready to work “off-chain,” running every bit a system that interfaces with the blockchain but exists on servers that are not part of it. These systems are fast, flexible, and relatively lightweight — reducing some of the “N squared” complication challenges — but tin can be striking with the aforementioned type of hacks that affect web services anywhere on the internet. (“This is not actually blockchain,” Gu says. “These are ‘Web2’ servers.”)

Without the blockchain to settle transactions, the Ronin bridge relied on nine validator nodes, which were compromised through a combination of lawmaking hacks and unspecified social engineering science.

There are other bridge systems that operate as smart contracts — basically, the “on-chain” alternative. It’s less likely that an attacker could subvert the lawmaking of an on-chain organisation through social applied science, and getting majority power over the network is extremely unlikely. The drawback is that the smart contracts themselves are highly complex, and if bugs practice exist, it tin can be hard to update the organisation in a timely way. (Wormhole used an on-concatenation system, and the large theft occurred later on hackers spotted security updates that were uploaded to GitHub only had not been deployed to the live smart contract.)

How do nosotros finish bridges from getting hacked?

It’due south hard. The answer that came upwards time and time again was “code auditing.” In the blazon of case described above, where a projection’s development squad might be working across different programming languages and computing environments, bringing in exterior expertise can encompass blind spots that in-house talent might miss. Just right now, a surprisingly big number of projects don’t have whatever auditor listed.

Nick Selby, director of assurance do at specialist security auditing company Trail of Bits, said that this is partly because of how fast the market has sprung up. Most companies are under huge pressure to grow, calibration, and build new features to fend off competitors — which can sometimes come at the expense of diligent security work.

“Nosotros’re in, I wouldn’t phone call it necessarily a chimera, just it’s certainly a gilded rush,” says Selby. “I think a lot of times, executives who are trying to introduce in the space will look at the desired characteristic outcome and say, ‘Well, this [product] does have the features I want. Therefore, it’s skilful.’ And there’s a lot of things they’re non looking at, so they’re not seeing them, which is where the lawmaking audit comes in.”