What will be the impact of hackers taking nearly $200 million from the cross-chain bridge Nomad Bridge?

On the evening of August 1, Nomad Bridge was hacked, and almost all of the $200 million of the cross-chain bridge was stolen. This is the fourth major cross-chain bridge hack this year, bringing the total value of cross-chain bridge attacks in 2022 to over $1 billion. Let’s take a look at some of the affected blockchains and applications associated with this hack.

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Launched earlier this year, Nomad is the primary cross-chain bridge for the Evmos and Moonbeam blockchains, but also has a presence on Ethereum , Avalanche , and Milkomeda C1. It has strong VC backing and recently announced a $22.5 million funding round from some of the biggest names in the space , including Coinbase , Polygon , OpenSea , and Crypto.com . Additionally, they were audited in June 2022 by Quantstamp , one of the leading blockchain and smart contract auditing firms .

With the combined value of Evmos and Moonbeam rising, Nomad reached a combined value of nearly $200 million in late July.

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Like other cross-chain bridges, Nomad works by bridging an asset from one chain to another, locking it in a smart contract on its local chain, and sending users a “bridged” version of the asset on the other chain . For example, Nomad allows users to receive ETH.mad on Moonbeam in exchange for real Ethereum locked on the Ethereum mainnet.

Based on the limited information currently available, the exploit used by the hackers is relatively simple and surprisingly has not been discovered before. Essentially, when a user transfers funds from one blockchain to another, Nomad never checks to confirm that the user will receive the same amount as they bridged. So a user can bridge 0.1 ETH and then manually call a smart contract on another blockchain and tell it that it is receiving 100 ETH.

Following the hack, Moonbeam suspended its blockchain, preventing anyone from transacting or interacting with smart contracts. A significant amount of DeFi activity on Moonbeam is conducted using assets from Nomad Bridge, which can have catastrophic effects on the entire Moonbeam ecosystem if not handled properly. At the time of this writing, the blockchain rebooted, and as expected, everyone dumped their Nomad-backed assets as quickly as possible.

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Evmos did not suspend its blockchain, and the EVMOS token surged sharply as users sold their Nomad-backed assets in exchange for assets native to the blockchain. Whether this will last remains to be seen, but EVMOS will likely fall back to its original price or lower as people leave the ecosystem. It’s unclear how Nomad will respond, or if they will try to compensate users who lose their funds.

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Overall, the Nomad hack will have the most negative impact on the Evmos and Moonbeam blockchains, but the aftershock will affect the entire market. Users will be more suspicious of cross-chain bridges, the price of top assets could drop if hackers try to sell them, and regulators will put more scrutiny on the area.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-will-be-the-impact-of-hackers-taking-nearly-200-million-from-the-cross-chain-bridge-nomad-bridge/
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