Blockchains are becoming increasingly important as a tool for removing intermediaries and easy access to digital asset ownership. Coinchange and its Research department are happy to share their fifth Research Report titled “Crosschain interoperability and security – Categorization and solutions”. These pillars can be compromised by stealing signer keys, colluding with validators, maliciously upgrading contracts, exploiting code vulnerabilities, compromising RPC endpoints, and re-org attacks. Bridges are applications built on top of this layer and can be categorized based on their application, such as token bridges, NFT bridges, governance bridges, lending bridges, and ENS bridges.
The risk pillar that was compromised in this case was ‘Implementation Security’, as the use of a deprecated function led the attacker to bypass verification of signatures giving the attacker the authority to mint new tokens. The attacker exploited the use of a deprecated, insecure function to bypass signature verification. The risk pillar that was compromised in this case was ‘Economic Security’ meaning the cost to gain control over the validators was not sufficiently high. The attacker gained access to Sky Mavis's computer, who is the creator of the blockchain NFT game Axie Infinity, by offering a job using a malicious PDF (i.e. a phishing attack). For example you have to assume not only that the multisig committee are good people and they have world class security, but also assume that the third party RPC providers too have a very secure infrastructure. Even if they outsource their RPC to a 3rd party, they are only risking their own funds.
These validators are required to sign every block header during their period, and if more than 2/3 of the validators sign off every block header, the state of Ethereum is deemed a valid state. The setup consists of a sync committee of 512 validators in Ethereum randomly chosen every 27 hours. It therefore makes sense that ZKPs are also being explored to formulate bridge constructions. In recent years we have seen tremendous progress in applications of Zero Knowledge Proofs (ZKPs) for rollups, where soundness properties allow for secure and decentralized applications. In this article, we focus on specific implementations of bridge constructions using Zero Knowledge Proofs (ZKP’s).
As of the time of writing this article, there are more than 100 layer 1 (L1) blockchain protocols with a growing number of users, and with increased use-cases of blockchains this number is likely to grow. Bridges which enable interoperability between different blockchains, rely on a messaging infrastructure that enables data transfer across chains. In conclusion, developers must take proactive measures to ensure the security and reliability of their blockchain bridges.
It is also possible to verify both state transitions and consensus on-chain for maximum security, similar to running a full node. A light client or light node is a piece of software that connects to full nodes to interact with the blockchain. The use of properties inherent in zk-SNARKs remove the need for the committee model while still scaling the network. On the other hand, such an important piece of the puzzle represents one of the weakest points in the larger blockchain ecosystem. On the one hand, the volume moved through bridges indicates an increasing market demand for interoperability. Deposited assets stay onchain for maximum security, complete visibility, and seamless composability across the Ethereum ecosystem.
The bridges are categorized by their application and the way cross-chain messages are validated. In this case, protocols can use data retrieved from a protocol and a SNARK correctness proof to transfer data from different protocol databases to each other. Critical data management, such as in the case of bridges, often requires a full replica of the data in a trusted environment under complete control. ZkBridge is a framework that allows for the creation of applications that can communicate between different blockchain networks.
Specifically, zkIBC is looking to emulate the trustless communication protocol used by Cosmos sovereign chains named Inter Blockchain Communication Protocol (IBC) and expand this to be usable with Ethereum. Since bridges need to keep track of the state of two chains, they require significant computing power and storage capability. The magic of ZK is not just in what it reveals but in what it keeps hidden, creating a secure and efficient bridge between the diverse realms of blockchain technology. Interoperability, the ability for these blockchains to understand and interact with each other, is crucial for the growth and evolution of the blockchain ecosystem.
In contrast, threat response only becomes relevant after a hack has occurred, and its effectiveness is limited by the amount of damage that has already been done. This is because threat mitigation focuses on preventing hacks from occurring in the first place, while threat response deals with the aftermath of a hack. Bridges handle large amounts of value and must be designed and implemented in a way that ensures their security and reliability. The attack exploited a vulnerability in the underlying code by forging a merkle proof for a specific block. The attackers signatures were believed to have been properly verified which then enabled the attacker to mint the stolen ETH.
Bridge hacks have constituted a substantial ~70% of total funds stolen in the DeFi sector over the past two years, mainly due to the novel technology, vast attack surface, and high value at stake. Hybrid validation seeks to find a balance between security and complexity. Decentralized validation is the most secure, but also the most complex to build, whereas centralized validation is less secure but easier to build. Even with the best threat mitigation measures in place, it is still possible for a hack to occur, so having a well-defined threat response plan is essential. The second part of the framework can consist of scoring questions that require the data gathered in Part 1.
Without a standard risk framework, it would be very difficult to compare the different bridge models based on the raw information, which can lead to poor choices. In short, recovering funds doesn’t stop at the bridge level but also extends to exchanges and the teams behind the stablecoins as well. For example in the $610M Poly Network hack, the attackers swapped some of the stolen funds to Tether and the issuers of Tether were able to freeze around $33M and return it to the network later. If the bridge hack is noticed late, in which case the funds themselves cannot be recovered on the bridge itself, it is still important to notify the exchanges, the stablecoin issuers, get the address labeled on Etherescan etc. Then there are others that are experimenting with 30-min to 2-hours challenge windows which makes the bridge riskier in comparison to the longer period ones but more efficient. Smart contract state monitoring services offered by third parties or features like Challenge window period found in rollup bridge designs inherently have a benefit in response time to hacks.
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These tradeoffs lead to different conceptualizations of blockchains, thus enabling developers the freedom to choose different platforms for suitable applications. The relay network then submits the Groth16 proof to the updater contract that can verify it on-chain. The block header relay network consists of a network of relay nodes that listen to the state changes on the bridged chains, and retrieve block headers from the full nodes in the blocks. The idea is similar to that of the two approaches discussed earlier, and requires a light client and smart contracts on both chains that keep track of the digest, corresponding to the most recent state on either side. In a practical sense, running a light client from other blockchains on Ethereum appears challenging. The core idea here is to use a zk-SNARK (Groth16) to produce a validity proof (which is constant size) and can be efficiently verified on-chain on Gnosis.
Thus protocols building on top of Layer Zero also have this added benefit thus preventing a crime before it happens. With messaging, you lose this atomicity and there is a gap in time, where block confirmations need a certain threshold before the message is sent to the destination chain. In this illustration we have a bridge that supports Ethereum, Optimism, Polygon and Arbitrum. By having security experts review the source code, it’s possible to identify vulnerabilities and security flaws that may not have been apparent during development.
Instead, they are made up of two smart contracts that hold tokens and a set of rules that determine who has access to those tokens. Similarly, Centralized Exchanges (CEX) can also act as bridges although the infrastructure might be opaque to the end user. What that means is, all messages passing through the bridge are thought to be non-fraudulent until proven otherwise during the challenge period by a set of decentralized network of watchers. Optimism has an optimistic messaging bridge and any token bridge that's built on top inherits the same rollup security inherited from Ethereum. A bridge is an application built on top of this messaging protocol.
Although threat mitigation is generally considered to be more important than threat response when it comes to hacks in blockchain bridges, threat response is still an important part of any security strategy. As discussed earlier, upgrading the smart contracts of a messaging layer to fix bugs, improve speed, or launch new technology can introduce risk vectors that can compromise the security of the bridges and dApps using the messaging layer. By implementing effective threat mitigation measures, developers can reduce the likelihood of their blockchain bridges being hacked, which can help prevent the loss of assets and damage to the network.
Cardano is probably easier to corrupt and sensor than Ethereum is but the bridge is basically what would allow a malicious state on Cardano to be transferred to Ethereum and break that integrity of Ethereum. Bridges are essentially an oracle of information and state from one chain to another. Additionally, it's advised to rely on multiple independent sources of data by using both self-owned and third-party nodes verifying the integrity of the information they provide. But in a trusted bridge like a Multisig bridge, and if they outsource their RPC to a 3rd party provider, your trust assumptions increase.
For instance, if a user wants to exchange USDC on Arbitrum for ETH on Ethereum, they would require a bridge aggregator that integrates spinmaya casino bonus DEXs. Upon locking or burning an asset on a source chain, they typically mint assets on a destination chain. And while exiting back, burning the asset on chain B, and unlocking the asset on chain A. A typical transaction flow would be locking an asset on chain A and minting the asset on chain B. Coming back to bridge categories based on applications, the most widely used one is a token bridge. This gives a decent level of compromise on decentralization (depending on numbers of validators) while being practical.
