Over $2B Lost in 13 Separate Crypto Bridge Hacks This Year

Key Insights:

• Chainalysis reports that bridges have become the top crypto security risk.
• North Korean-linked hackers have been highly active in bridge exploits.
• More than $2 billion has been lost from bridge attacks this year.

In a report released this week, blockchain analytics firm Chainalysis stated that vulnerabilities in cross-chain bridge protocols have emerged as the top security risk.

The firm estimates that $2 billion in crypto assets has been stolen from bridges in 13 separate exploits this year. “Attacks on cross-chain bridges account for 69% of total funds stolen so far this year,” it added.

A bridge is software usually consisting of smart contracts that enable tokens to be transferred from one network, such as Ethereum (ETH), to another, such as Avalanche (AVAX). Each blockchain ecosystem has its own token standard though Ethereum’s ERC-20 has emerged as the industry standard.

A Bridge Too Far

The report follows the hack of the Nomad bridge this week, which resulted in the loss of the protocol’s entire collateral of $190 million.

As more value flows across these bridges, they become more attractive to hackers, the report added. It also stated that hacking groups with ties to North Korea have been responsible for half the amount lost so far this year by targeting bridges and decentralized finance (DeFi) protocols.

Bridges are lucrative targets for cyber criminals because they often store funds that back the bridged tokens on the destination chain. The funds could be held in a smart contract or centralized custodian, but they become a central storage point which is the target.

Additionally, bridges are mainly experimental, and the technology hasn’t had time to mature, meaning vulnerabilities and novel attack vectors can be discovered.

The largest bridge hack to date was the Ronin bridge which was exploited for $615 million in March. Ronin allows users to transfer assets from the Axie Infinity (AXS) Metaverse game between various blockchains. In February, the Solana (SOL) Wormhole bridge was exploited for $325 million.

To protect themselves, crypto platforms have been urged to undergo rigorous auditing processes. However, even audited smart contracts can be exploited, as was the case with Web3 music streaming platform Audius which lost $6 million in a hack in July.

Although not a bridge attack, the Solana ecosystem suffered another setback this week when as many as 8,000 wallets were exploited for more than $8 million.

Crypto Market Unfazed

In previous years, multi-million dollar hacks and exploits would send crypto markets tumbling. However, they appear to be unfazed this week.

Total market capitalization has gained 2% on the day to reach $1.12 trillion. Markets remain range bound, however, with resistance proving too strong to overcome.

Bitcoin (BTC) has inched up 1.5% to $23,146, while Ethereum was trading 2.7% higher this morning at $1,654 at the time of writing.