The $328M Wormhole Heist: Why Are Crypto Chain Bridges Like Wormhole Dangerous And Risky?

The $328M Wormhole Heist: Why Are Crypto Chain Bridges Like Wormhole Dangerous And Risky?

crypto chain bridges

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In what is now being described as the fourth-largest breach in the history of decentralized finance (DeFi), an attack on the Ethereum and Solana bridge known as Wormhole robbed users of an estimated $328 million.

But the problem could be bigger than just Wormhole. The breach could extend to bridges and other connections between blockchains, presenting an inherent security challenge that could threaten the future of the entire blockchain ecosystem, according to analysts.

READ MORE: Crypto Hacker Burglars Hit DeFi Wormhole Ether-Solana Bridge For $328M: Here’s What We Know

DeFi platforms such as Wormhole allow users to save, borrow, lend or swap Solana directly for other cryptocurrencies on decentralized apps or dApps across the Ethereum crypto network while bypassing traditional gatekeepers of finance such as banks.

While some argue that the recurring attacks on cryptocurrency networks are part of a learning process on the way to better security, there are concerns that it is starting to feel more like an inevitable risk — just the cost of doing crypto business.

Crypto chain bridges, which work by getting two chains to talk to each other, have been found to have an embedded, structural security flaw unlike when transactions are done on same blockchain. The user of multi-chain bridges could be exchanging security risks for efficiency.

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Ethereum cryptocurrency co-founder Vitalik Buterin announced in January that there could be a “fundamental security limits of bridges,” contrary to the notion that only a 51% attack can break a crypto network.

“I really disagree with this style of thinking; in fact, blockchains maintain many of their guarantees even after a 51% attack, and it’s really important to preserve these guarantees,” Buterin wrote.

“For this reason, it’s always safer to hold Ethereum-native assets on Ethereum or Solana-native assets on Solana than it is to hold Ethereum-native assets on Solana or Solana-native assets on Ethereum.”

51% attack is where a single entity or organization is able to control the majority of a blockchain’s hash rate — the computing power needed to secure a crypto network, potentially causing a network disruption. A 51% attack also allows the attacker to essentially rewrite parts of the blockchain and reverse their own transactions, leading to an issue known as double-spending.

The Wormhole attack was just an example of what could happen if a hacker breached the bridges between different cryptocurrencies.

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Hart Lambur, co-founder of the oracle protocol UMA, also warned on a Jan. 13 “Bankless” podcast episode that a poorly designed bridge “exposes users to a lot of risk that they don’t know they’re taking.”

To solve this risk, Buterin says the future will be multi-chain, but even with that, the risk of a 51% attack is much worse than before.

“The problem gets worse when you go beyond two chains. If there are 100 chains, then there will end up being dApps with many interdependencies between those chains, and 51% attacking even one chain would create a systemic contagion that threatens the economy on that entire ecosystem,” Buterin said.

READ MORE: Fact Check: Can China Destroy And Crash Bitcoin With A 51% Attack?