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Nowadays, there are a lot of blockchains accessible to almost everyone in the world, and their number is constantly growing. It is quite obvious that customers aren’t ready to concentrate on one chain. They utilize everything different blockchains have to offer. Here, cross-chain solutions come into place. They eliminate issues between many blockchains.
As the name suggests, these bridges are portals between two vastly different blockchain ecosystems, allowing transfers of data, smart contracts, and digital assets between them.
Although cross-chain technology is undoubtedly useful in solving the existing challenges on blockchain networks, vulnerabiliеies should also be considered.
Problems With Cross-Chain Bridges
Among them are massive hacker attacks, and it’s quite hard to audit bridges.
These problems come as a result of different consensus levels as well as programming languages used for blockchains. They have no requirements these days. As a result, there comes a great potential for IT experts and fraudsters to find bugs and exploit them. There will be one winner only of this “bug hunt challenge.”
So, it’s important to note that according to H-X Technology analysis, around $500 million were displaced due to cross-chain leakages. We are not even halfway through 2024, so expect these figures to rise drastically. Let’s take a look at the most prominent frauds that took place this year.
Top 3 Hacks in 2024
Radiant Capital
This cross-chain lending platform recently lost around $4.5 million due to a flash loan attack on its Arbitrum network. The hack occurred only seconds after the launch of the market. Analysts say that the fraudulent opportunity came about due to a flaw in the codebase of the market’s launch. To be more precise, a fault in the index parameters and the hacker’s ability to freely manipulate and alter them was the main cause that made the attack possible.
PlayDapp
Even earlier than our previous entry, PlayDapp experienced tremendous losses due to a malevolent hack. On February 9th and 12th, a series of unauthorized minting orders were accepted by PlayDapp’s protocol, resulting in the minting of around 1.8 billion PLA tokens, adding up to something around $300 million. Immediately after, the hacker managed to successfully launder the funds.
Trying to save their platform and token, PlayDapp chose to bargain with the hacker, offering a flat $1 million in response to him handing back the misplaced funds. These negotiations went fruitless as the hacker decided not to budge and kept laundering the funds. Later on, the platform announced a pause in its smart contract system for PLA tokens worldwide.
Orbit Chain
Orbit Chain, a South Korean crypto firm, lost $80 million. The hackers utilized a crucial flaw in the multisig signer system and were able to drain a large amount of a variety of cryptos stored on the platform. This is a somewhat expected occurrence, though, as it is not the first time we have seen hackers take advantage of security issues in Ozys’ projects.
As things stand we have yet to hear the news if the victims of this fraud would be compensated or not.
So, Is It Reliable to Use Cross-Chain Solutions?
Sadly, the fact is that blockchain, even though it has been around for quite a while now, is still regarded as a new technology and bears the inherent downsides of an unexplored system. This applies double to things like cross-chain bridges. As is, it’s a novel technology that shows the crypto community a path where we can create something more than the sum of its parts.
Yes, hackers now appear to have a new target: cross-chain bridges. These solutions are still a weak point for poorly audited smart contracts, and they can be used in an attack. The biggest players within the market, like Compound Finance and Uniswap, avoid these bridges. They are extremely cautious and are aware of the security risk.
We all should keep in mind that hackers reveal cross-chain vulnerabilities, exploiting them and siphoning huge amounts of money.
For example, the team behind Harmony offered a $1 million reward for information leading to the return of $100 million in altcoins drained from its bridge. The company also tweeted that no criminal charges will be laid when funds are retrieved.
At the same time, these cases urge the improvement of the security layers, creating tamper-resistant systems. IT experts are learning and showing the community that cross-chain solutions are a novelty and a curve to master.
