Cross-Chain Bridges: The Boon and Bane of Crypto Realm – A Deep Dive into Recent Hacks

A depiction of a digital bridge, stretching over a churning sea of code, cloaked in dusky twilight hues. The bridge represents cross-chain transactions, yet parts are crumbling, hinting at recent breaches. Overhead, storm clouds, punctuated by shards of dramatic lightning, symbolise turbulence in the crypto market. The overall mood is foreboding, with rays of golden light piercing through the clouds, hinting at potential resurgence.

The blockchain realm witnessed another hiccup when an optimism-based decentralized lender, named Exactly Protocol, fell victim to a bridge exploit that resulted in a loss of $12 million worth of ETH. This malefaction was astutely carried out via an exploiter contract on Ethereum that smoothly transferred deposits to Optimism before making off with the stolen funds back to Ethereum.

Blockchain security firm De.Fi, reported the incident and revealed its repercussions on the protocol’s overall financial disposition; the value locked on the protocol went diving from a hefty $36 million to a meagre $26 million, going by data from DeFi Llama.

To add to the wound, the protocol’s native governance token (EXA) took a hard hitting tumble by more than 15% in the backdrop of the bridge exploit. While the token currently trades at $4.91, it is a grim reminder of the vulnerability of technology.

Parallel to the growing trend of cross-chain bridges as a promising tool for blockchain transactions, they have become credulous targets for hackers. According to Chainalysis, bridge-related hacks cost the crypto world over $2 billion last year, a blameworthy chunk for such an emerging technology.

In its response to the unfortunate ordeal, the defi protocol made an acknowledgment of the hack. They openly expressed that an internal investigation was underway, and had paused the protocol momentarily to ensure user safety. Despite this precaution, users can still withdraw assets.

The timing of this hack seems to be in sync with a downturn in the broader cryptomarket; a conflagration that saw leading altcoins like XRP, LTC, and BCH experience severe double digit declines, while the leading cryptocurrency Bitcoin also took a blow and slumped briefly to as low as $25,200, before reviving from the ashes.

In a span of a mere 24 hours, positions worth almost $1 billion fell into the churning maws of liquidation. This landscape combined with the recurrent cross-bridge exploits have catalysed an environment of concern in the crypto industry.

However, this is not an event of first; Hundred Finance, a lending borrowing DeFi protocol on the Optimism network faced a similar plight. They suffered a major hack that led to a loss of $7 million worth of crypto assets. The frequency of such incidents is a wake-up call, underscoring the urgent need for stringent security measures.

Source: Cryptonews

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