Moody’s Investors Service has released a report detailing cross-chain bridge attacks and the need for blockchains to institute more security against such threats.
Cross-chain bridge attacks.
Moody’s Investors Service detailed in a Monday report the value of cross-chain bridges to the blockchain sector and the risks they pose to blockchain cybersecurity.
Challenges of cross-chain bridges.
Cross-chain bridges, or a “set of computer codes that enables the transfer of assets, data, or information between two different blockchains,” are open to a number of vulnerabilities. The report says that attacks on cross-chain bridges last year saw losses of upwards of $2 billion. Half of the 10 most profitable cyber thefts ever were observed against cross-chain bridges, with last year’s attack on the Ronin bridge a prime example, seeing losses of upwards of $600 million. Most bridges have a centralized architecture that creates a single target above point that can be exploited, but attacks have also been seen making use of operational weaknesses.
Cross-chain bridge advantages.
However, cross-chain bridges don’t spell only doom and gloom for the industry. Bridges are said to lower costs of transactions and allow for greater scalability and “cross-collateralization“ of cryptocurrency assets. Cross-chain bridges have also enabled the expansion of decentralized finance (or, the offering of financial tools without the involvement of an intermediary on the blockchain), with the report saying that the "top 10 cross-chain bridges commanded a total value locked (TVL) of more than $9 billion in cryptocurrency or other digital assets, around 15% of the TVL in all DeFi protocols together."