According to a new report, cross-chain bridge hacks will account for 69% of all stolen cryptocurrencies in 2022, with losses amounting to $2 billion.
The report comes from a report published on August 2 by blockchain analytics firm Chainalysis, stating that there are 13 separate token bridges hacker This year – the most recent was the $190 million Nomad Bridge exploit.
Q1 2022 was by far the most stolen quarter for cryptocurrencies since 2021, largely due to the Ronin Bridge attack in late March, in which $624 million in Ether (ETH) and Circle USD (USDC) was stolen steal.
Following last night’s exploitation of the Nomad Bridge, an estimated $2B has been stolen from the cross-chain bridge as of 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
— Chain Analysis (@chainalysis) August 2, 2022
Cross-chain bridges, also known as blockchain bridges, are designed to transfer cryptocurrencies from one blockchain network to another.
Chainalysis explained that while bridge designs vary, users typically deposit their tokens from one chain into the bridge protocol, which is then locked into a contract. Tokens equivalent to parallel tokens are then issued to users in another chain.
According to the Chainalysis report, bridges are often targeted because they “have a central storage point of funds that supports receiving ‘bridged’ assets on the blockchain.”
“Regardless of how those funds are stored — locked in smart contracts or centrally escrow — that storage point will be targeted.”
Some experts believe that effective bridge designs are still in their infancy, and some developers have relatively little knowledge of security protocols, making their protocols vulnerable to exploits by hackers.
In a clip released on July 22 TwitterNearly two weeks before the latest attack, Nomad founder James Prestwich said that “it will be at least another year or two before cross-chain security models are familiar enough to build defenses as a standard.”
“In a cross-chain system, we haven’t built up that kind of expertise about attacks where people don’t know what common attacks are, so they don’t defend against them.”
Centralized exchanges used to be a favorite target for hackers, but as security protocols have improved, successful cyberattacks have declined, according to Chainalysis.
The blockchain analysis firm emphasized that cryptocurrency services, including bridges, should start investing in security upgrades and training as early as possible.
“A valuable first step in addressing such issues may be to make extremely rigorous code auditing the gold standard in DeFi, both for those building protocols and for the investors who evaluate them. Over time, the strongest The biggest, most secure smart contracts can serve as templates for developers to build on.”