Wednesday, October 5, 2022
HomeCrypto NewsMarketUS Harmony’s $100 Million Hack Vindicates Ethereum Founder’s Concerns About Cross Chain...

US Harmony’s $100 Million Hack Vindicates Ethereum Founder’s Concerns About Cross Chain Bridges

- Advertisement -
Follow-Us-On-Google-News

 

Few Month Ago ETH Founder Described Dangers of Cross Chain Bridges, Today USA Harmony Hacked For $100M.



Harmony’s cross-chain bridge, Horizon, is the latest of such bridges to be attacked by hackers. It appears that crypto cross-chain bridges have become a huge target for hackers of late.

After the Ronin Bridge on Axie Infinity, now the Horizon Bridge has fallen victim to the exact attack. However, the funds stolen via the Horizon Bridge are far less than those taken via Ronin. The hack on Ronin Bridge led to the loss of around $620 million ETH and USDC while the attack on Horizon Bridge has led to the loss of around $100 million worth of cryptos.

Following the attack, Harmony based in California, United States took to Twitter to announce the sad news, adding that the company is now working closely with the authorities and forensic experts to track down the attackers.

 

BTC Not Affected

While a few blockchains served by the Horizon Bridge were affected, Bitcoin’s chain didn’t suffer any setbacks. Harmony acknowledged this in their Twitter thread. The affected chains include Binance Chain and Ethereum.

 

Investigations into the attack have revealed that a number of tokens were stolen during the attack. These include AAVE, USDC, wETH, wBTC, USDT, BUSD, AAG, SUSHI, FXS, FRAX, and DAI. Apparently, the attackers moved to swap the stolen tokens to ETH on Uniswap DEX before sending the ETH back to their wallets. From the look of it, this was a planned attack.

Community Concerns Vindicated

After news of the attack was broken, the community rose up in arms, reminding Harmony and the industry at large about the concerns that were aired about the Multisig control system used to secure the bridge and the cryptos.

 

Harmony used a multisig functionality that required only two out four trusted entities to execute a token transfer. The attackers managed to get hold of two validators and gained access to the stash.

Hacking incidents targeting cross-chain bridges have been rampant of late, prompting calls for more security checks on the part of the bridge operators. Since the start of the year, such attacks have led to a combined loss of around $1 billion from crypto platforms.

Threats of Cross Chain Bridges

Over 6 months ago Vitalik summarized the risks of cross-chain bridges in a Reddit post:

“The fundamental security limits of bridges are actually a key reason why while I am optimistic about a multi-chain blockchain ecosystem (there really are a few separate communities with different values and it’s better for them to live separately than all fight over influence on the same thing), I am pessimistic about cross-chain applications.

To understand why bridges have these limitations, we need to look at how various combinations of blockchains and bridging survive 51% attacks. Many people have the mentality that “if a blockchain gets 51% attacked, everything breaks, and so we need to put all our force on preventing a 51% attack from ever happening even once”. 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.

For example, suppose that you have 100 ETH on Ethereum, and Ethereum gets 51% attacked, so some transactions get censored and/or reverted. No matter what happens, you still have your 100 ETH. Even a 51% attacker cannot propose a block that takes away your ETH, because such a block would violate the protocol rules and so it would get rejected by the network. Even if 99% of the hashpower or stake wants to take away your ETH, everyone running a node would just follow the chain with the remaining 1%, because only its blocks follow the protocol rules. More generally, if you have an application on Ethereum, then a 51% attack could censor or revert it for some time, but what comes out at the end is a consistent state. If you had 100 ETH, but sold it for 320000 DAI on Uniswap, even if the blockchain gets attacked in some arbitrary crazy way, at the end of the day you still have a sensible outcome – either you keep your 100 ETH or you get your 320000 DAI. The outcome where you get neither (or, for that matter, both) violates protocol rules and so would not get accepted.

Now, imaging what happens if you move 100 ETH onto a bridge on Solana to get 100 Solana-WETH, and then Ethereum gets 51% attacked. The attacker deposited a bunch of their own ETH into Solana-WETH and then reverted that transaction on the Ethereum side as soon as the Solana side confirmed it. The Solana-WETH contract is now no longer fully backed, and perhaps your 100 Solana-WETH is now only worth 60 ETH. Even if there’s a perfect ZK-SNARK-based bridge that fully validates consensus, it’s still vulnerable to theft through 51% attacks like this.

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.” 

- Advertisement -
Ammara
Ammarahttps://thecryptobasic.com/
Ammara Mubin is a cryptocurrency reporter and trader with vast experience in the industry. Mubin has written several news stories related to the crypto industry, including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Recent News & Articles

Subscribe To Our Newsletter

Get Updated with All The latest Crypto News, Articles, Reviews, Analysis and much more. Delivered Every Monday.

spot_img