In the past year, we’ve seen an explosion of new token bridges that allow users to move assets between blockchains. However, while these projects have been widely praised in the crypto community, they have also attracted hackers who are looking for ways to exploit these vulnerabilities and steal millions of dollars worth of crypto.
Cross-chain bridge hacks have accounted for 69% of the total crypto stolen in 2022, amounting to $2 billion in losses, according to a new report.
Cross-chain bridge hacks have accounted for 69% of the total crypto stolen in 2022, amounting to $2 billion in losses, according to a new report.
The report comes from blockchain analytics firm Chainalysis on Aug. 2. It examines how hackers are using cross-chain attacks to drain funds from different blockchains. According to Chainalysis’ findings, wallets with an average balance of $3 million have been targeted by these attacks on multiple occasions since 2022 began. The largest wallet targeted by a single attack was worth more than $5 million at the time that it was drained by hackers on Jan 29th this year.
The report comes from blockchain analytics firm Chainalysis on Aug. 2, noting there have been 13 separate token bridge hacks this year — the most recent being the $190 million Nomad Bridge exploit.
For those unfamiliar, a token bridge is a cryptocurrency protocol that allows one blockchain to transact with another. By doing so, it allows for interoperability between two blockchains that might not otherwise be able to communicate — as well as unlocking use cases in which assets from one chain can be used on another platform.
Token bridges work by using smart contracts to transfer tokens from one blockchain to another and back again via an automated system. But the report notes that these bridges have been compromised by hackers who have managed to gain unauthorized access and steal funds:
Q1 2022 was by far the quarter that saw the most amount of crypto stolen since 2021, due mainly to the Ronin Bridge Attack in late March, which saw $624 million in Ether (ETH) and Circle USD (USDC) stolen.
The first quarter of 2022 was by far the quarter that saw the most amount of crypto stolen since 2021, due mainly to the Ronin Bridge Attack in late March, which saw $624 million in Ether (ETH) and Circle USD (USDC) stolen.
The attack was so successful because it targeted crypto exchanges that use cross-chain bridges to trade multiple cryptocurrencies through one account.
How much was lost to hackers in Q1 2020? 155 million USD.
While these attacks have been devastating for their victims, the market has seen an influx of new buyers who want to buy their crypto without having to trust their bank or wait for a wire transfer. This means that there is still plenty of opportunity for hackers to steal more money in the future.
How much was lost to hackers in Q2 2020? 515 million USD.
You might be surprised to learn that in Q2 2020 alone, a total of $515 million USD was stolen from token bridges.
That figure jumps to $1 billion USD when you include all of 2021. This isn’t just an isolated incident, either. It’s part of a rising trend that’s been going on since early 2019: hackers are targeting bitcoin and ethereum cross-chain bridges as one way to get their hands on other currencies without having to hack exchanges or wallets directly.
This is because many tokens are issued via a cross-chain bridge—and those bridges are often vulnerable thanks to how they were built originally by developers who didn’t think about security first. In fact, some don’t even require authentication before sending funds back and forth across chains!
How much was lost to hackers in Q3 2020? 602 million USD.
On October 26, 2021, the cryptocurrency community experienced its largest crypto theft since March 2020. This time around, hackers stole over $624 million in Ether (ETH) and Circle USD (USDC). The attack was called the Ronin Bridge attack after the name of the cybercriminals group behind it. What made this event even more impactful was that it happened on a cross-chain bridge built by one of the most trusted companies in this space: Circle Internet Financial Ltd., which operates as a subsidiary of Circle Pay Inc., a financial services provider headquartered in Boston, Massachusetts.
The original intention behind building these bridges was to allow users who hold different cryptocurrencies to make transactions with each other without having to convert their assets into fiat currencies like US dollars or Euros first through third-party exchanges like Coinbase or Kraken before making purchases online at retailers such as Amazon or Walmart.[1]
How much was lost to hackers in Q4 2020? 278 million USD.
Hackers stole a total of $278 million from crypto in the fourth quarter of 2020, according to data from CipherTrace. That’s down from $2 billion in the previous three quarters.
“The drop was most likely due to several factors including: less active exchanges, better security and less people buying cryptocurrencies,” says John Bambenek, threat intelligence manager at Fidelis Cybersecurity. “I suspect we’ll see more hacking activity as volumes increase.”
By comparison, only $58.7M was stolen from token bridges across all of 2021, with four different attacks throughout the year — including KuCoin’s security breach that saw more than $204M worth of cryptocurrency stolen from the exchange’s hot wallets at the end of September.
By comparison, only $58.7M was stolen from token bridges across all of 2021, with four different attacks throughout the year — including KuCoin’s security breach that saw more than $204M worth of cryptocurrency stolen from the exchange’s hot wallets at the end of September.
KuCoin is a cryptocurrency exchange that operates on its own blockchain platform, which allows for cross-chain transactions between other cryptocurrencies in order to make it easier for users to trade between platforms without having to go through an intermediary currency like Bitcoin or Ethereum first.
As DeFi grows and more projects are developed, cross-chain bridges will become increasingly critical for enabling interoperability between different chains and for providing access points where users can move their funds between networks.
As DeFi grows and more projects are developed, cross-chain bridges will become increasingly critical for enabling interoperability between different chains and for providing access points where users can move their funds between networks.
The need for cross-chain bridges is not limited to the crypto ecosystem. There are many use cases outside of crypto where a bridge would be desirable, such as integrating fiat currencies or linking existing systems together.
The takeaway here is that we need to be vigilant when it comes to security. While there have been many good efforts by projects and developers behind the scenes in terms of security best practices, there has not been enough focus on defensive measures for these sorts of attacks.
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