DeFi security: How trustless bridges could help users be protected
Trustless bridges allow cross-chain transfers without the need for a central custodian. This could make it safer for interoperability. Analysis This article can be yours. A trader may use USD Coin (USDC), on the Ethereum or Solana Blockchains, to interact with the DApps on those blockchains. The Wormhole bridge, a popular cross-chain crypto link between Solana and Ethereum, Avalanche, and others, was hacked in the last year. At the time, attackers stole over $321 million worth wrapped Ethereum (wETH). This hack was the largest in DeFi history. A month later, the Ronin Network bridge, AxieInfinity’s Ethereum-based sidechain, was hacked for more than $620 million. On Aug. 2, the Nomad Bridge was hacked to steal $190 million. Between 2020 and 2022, more than $2.5 billion was taken from cross-chain bridges. Trustless bridges, also known as noncustodial and decentralized bridges could increase cross-chain transfer security. These bridges allow two or three separate blockchain networks to communicate and share information. Cross-chain bridges allow assets to be moved between different blockchain networks. These bridges make it easier for different blockchain networks and users to use each network’s unique features. Trusted bridges can be managed by centralized entities which take custody of tokens once they have been transferred to the bridge. Custodial bridges are subject to a single point of failure (the central custodian), making it easier for hackers to hack. Trustless bridges use smart contract technology to complete the transfer. Smart contracts are programs that execute certain actions when the conditions are met. Trustless bridges are considered safer because each user retains custody of their tokens throughout the transfer process. Trustless bridges can still be compromised by smart contract code vulnerabilities that are not fixed by the development team. “It increases the attack area through blockchains, potential custodians, and smart contracts. There are various types of cross-chain bridges, which come with different trade-offs in terms of these risks.” He continued:”Cross-chain bridges naturally involve two or more blockchains, typically using distinct security mechanisms. The security of bridged assets is dependent on the weakest blockchain. If one of the blockchains were attacked, it would be possible to reverse a cross-chain Swap on one chain but not the other, resulting in an imbalanced of assets. Berrang also highlighted the vulnerabilities associated with the bridged assets being locked into it. Funds are often stored or locked in one central location, which can lead to a single failure point. Depending on the type and structure of the bridge, these funds can be subject to different risks. In a smart contract-based bridge, bugs within those contracts can render bridged assets worthless.” Berrang stated. “A bug that allows infinite minting new bridged tokens could be an example. Security is a major risk. Trusted custodians are at risk if they behave badly or lose their keys. Security is the greatest risk. Cross-chain bridges are difficult to implement and can be exploited by malicious actors to steal assets or do other malicious acts. It is crucial to ensure that cross-chain bridges are secure and free of vulnerabilities. Regular security audits, bug bounty programmes, and code reviews can help to identify and fix security issues. Developers can also use cryptographic algorithms such as digital signatures or hash functions to protect the transfer of information and assets between different blockchain networks. This ensures that transferred assets are secure and that malicious actors cannot interfere with the process. Network monitoring is also essential to detect suspicious activity, and prevent attacks. Developers can monitor the network and detect security issues before they cause harm. Cross-chain bridge security and stability can be improved by developers who do this. However, trustless bridges are only safe if the smart contract code is fully audited to eliminate vulnerabilities. Trustless bridges have the main security benefit that users retain custody of their tokens throughout the process. Smart contracts take care of the transfer process. Trustless bridges have the advantage of being easier to audit and minimizing trust. Trustless bridges are less risky than centralized bridges. However, they can still be risky. Trustless bridges could grow in popularity as crypto users become more concerned about self-custody, decentralization, and other aspects of crypto.