Whopping $1.2 Billion Stolen in Defi Hacks in Q1 of 2022

Paigambar Mohan Raj
Source: nairametrics

According to the REKT Database, hackers and exploits stole $1.19 billion in the first three months of 2022. The statistic is concerning because of the hacks that happened in Q1 account for 35.8% of all stolen monies from the same REKT Database source.

According to the report, malicious attacks have been launched against bridges, which are platforms used to transfer tokens from one blockchain to another. Sky Mavis stated last week that the Ronin bridge, which is used to transfer funds between Ethereum and Ronin, had been hacked. A total of $615.5 million in ETH and USDC was lost as a result of this. This attack became the greatest cryptocurrency theft in the history.

Another popular bridge, the Solana Wormhole, was exploited for $326 million in February. Vitalik Buterin discussed the technical constraints of bridges at the start of this year, asking whether the requirement for a multichain ecosystem rather than a cross-chain like the one we’re seeing now is worth the risk. Prepare to hear about security and regulations frequently in the sector for the next few months.

Why are bridges prone to a hack?

Bridges’ basic security limitations, according to Buterin, are a major reason why he is optimistic about a multi-chain blockchain ecosystem but skeptical about cross-chain applications.

Buttering said that we need to look at how various combinations of blockchains and bridging survive 51% of attacks to understand why bridges have these limits. Many individuals believe that if a blockchain is 51% attacked, everything fails and that we must devote all of our resources to avoiding a 51% attack from ever occurring. Buterin disagrees with this line of reasoning; even after a 51% attack, blockchains keep many of their guarantees, which are critical to sustaining.

Buterin states an example where, if you put 100 ETH on a Solana bridge to get 100 Solana-WETH, and then Ethereum is 51% attacked. The attacker would have deposited a large amount of their own ETH into Solana-WETH, then reversed the transaction on the Ethereum side once the Solana side verified it. Because the Solana-WETH contract is no longer fully backed, your 100 Solana-WETH may now be worth only 60 ETH. Even if a perfect ZK-SNARK-based bridge exists that fully validates consensus, it is still subject to 51% of assaults such as this.