What can we learn from the Solana wormhole hack?

On February 2, 2022, the Solana Wormhole Bridge, which connects the Solana blockchain to Ethereum, was hacked, stealing over $300 million in ETH. A week later, the incident appears to have come to an end. However, there is still a lot to learn from this disaster, especially regarding the security of cross-chain assets.

Solana’s wormhole attack is the second-largest cryptocurrency hack in history, after Poly Network’s $600 million attack a few months ago. A wormhole is a blockchain bridge that allows assets such as NFTs and tokens to be transferred from one blockchain to another. Hackers were able to trick the wormhole contracts into thinking they owned Ethereum on Solana when in fact they didn’t, and thus were able to withdraw 120,000 ETH into the Ethereum blockchain.

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This immediately caused an uproar in the Solana community, as nearly 3% of the total value locked in Solana is now not backed by any tangible assets. As a result, the price of Solana dropped by 10% almost immediately, and its entire DeFi ecosystem was at risk of collapse.

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Fortunately, Jump Trading, the parent company of Wormhole, stepped in in time to “save the field” and replenished 120,000 ETH “out of his own pocket”. After just one day, the Wormhole Bridge was back online. The actions of Jump Trading prevented a possible domino effect in the entire Solana DeFi space.

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Although the incident has largely been resolved, the cryptocurrency ecosystem can learn a lot from this disaster, which will help create a more secure multi-chain future.

The most obvious lesson is the importance of bridge security. As bridging between different blockchains becomes more commonplace, tens of billions of dollars will be at risk, all at risk of being hacked. Wormhole shows us this reality with Poly Network, an Ethereum-based multi-chain bridge that suffered the biggest hack in the history of cryptocurrency. It’s no coincidence that the two major hacks targeted bridges, and there are likely to be more in the future.

For any asset derived from a bridged asset, it is important to know which bridge the asset came from, as we now know that not all bridged assets are created equal. If every ethereum on Solana was unique based on which bridge it came from, there would be less liquidity and efficiency on the DeFi platform, but the collapse of one bridge does not mean the collapse of DeFi.

Likewise, fully trustless and decentralized multi-chain systems, such as those on Cosmos and Polkadot, will become more commonplace. If the functionality of bridging assets is inherently built into the protocol, it is more secure from vulnerabilities and therefore more valuable to consumers. Both Cosmos and Polkadot are creating interoperability hubs, which will allow various different blockchains to interoperate with each other while ensuring stability and security.

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To sum up, as the cryptocurrency world matures and more and more funds are locked up in different protocols and smart contracts, the risk of hacking and exploitation will only continue to rise. Bridges will be one of the most vulnerable platforms as they require the security of multiple different blockchains and are key to interoperability. To secure a multi-chain future, bridges will need to become more decentralized, secure, and resistant to different types of attacks, or risk becoming the new biggest cryptocurrency hack in history.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-can-we-learn-from-the-solana-wormhole-hack/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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