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Unveiling the Truth: Coinbase Exposes the Root Causes of Recent Crypto Bridge Hacks

Jack Evans
Oct 20, 2023 at 09:02 pm

In the fast-paced realm of cryptocurrencies, where innovation meets the unknown, recent bridge hacks have sent shockwaves throughout the industry. Coinbase's Institutional Research team has delved deep into the cryptic world of cross-chain bridges, uncovering the complex intricacies that gave rise to these breaches.

According to Coinbase Institutional's latest research report, the largest bridge hacks in recent years have roots in the intricate process of signing and validating messages by relayers – those third-party services responsible for facilitating data transfer across different blockchains. David Han, an astute Institutional Research analyst at Coinbase, draws attention to the notorious Ronin bridge hack, where a clever hacker, using a social phishing scheme, managed to obtain five out of nine private keys required to forge data payloads for unauthorized withdrawals.

Han further elucidates, "The Multichain hack in July 2023 also saw the private key of the relayers compromised, leading to the validation of fraudulent transactions."

Yet, there's a glimmer of hope on the horizon. The crypto industry bore the brunt of more than $2 billion in losses during 13 separate cross-chain bridge hacks in the first half of 2022. However, Han optimistically reports that both the frequency and scale of bridge-related hacks have witnessed a significant decrease. According to Coinbase's calculations, the value lost due to such hacks has plummeted by a staggering 90% in 2023, now standing at less than $140 million. While Han acknowledges the persistence of risks, he believes that bridge-related hacks are on a declining trajectory. This is due to bridge designs increasingly leveraging canonical rollup bridges for escrow, promising enhanced security and reliability.

As the crypto world evolves, so does the understanding of its vulnerabilities. Coinbase's rigorous research has unveiled the intricate complexities that underlie recent bridge hacks, shedding light on the path towards a more secure crypto landscape. While the shadow of risk still looms, the industry is moving toward safer designs and more secure solutions, promising a future where cross-chain bridges can be traversed with confidence.

In the words of Ethereum co-founder Vitalik Buterin, the crypto community recognizes that safety remains paramount, and multi-chain solutions may indeed provide a more reliable haven. By continuing to adapt and fortify its infrastructure, the crypto world aims to fortify the bridges that connect its various realms, ensuring a future where trust and security reign supreme.

Read more: Fantom Foundation Security Breach: $657K Lost from Wallets

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