The danger of DeFi cross-chain bridges has been illustrated by the Wormhole hack
Questions have been raised on the Solana ecosystem and its cross-chain protocols after the second-largest decentralized finance hack took place. After its official launch, Solana became the fastest-growing smart contract blockchain network. The network has seen a rise in its TVL (total value locked) which expanded from US 152 million in March 2021 to US 8.08 Billion in February 2022, according to the data reported by DefiLlama.
But at the same time, the network has been subject to different outages and network issues. Recently the Wormhole token bridge was hit by a security breach on 3rd February that finished with a loss of 120000 wrapped Ether (wETH) tokens worth more than US 375 million at the current Ether price (ETH).
This security breach is the second largest DeFi hack in history and the biggest hack of this year. The biggest ever DeFi hack was on Poly Network, where more than US 600 million was stolen from three different types of networks while the Ethereum bridge was compromised.
The wormhole is a token bridge protocol that is connected with various blockchain networks such as BNB Smart Chain, Solana, Polygon, Ethereum, Terra, Oasis, Avalanche. The network enables the conversion of tokens between these networking platforms without any exigency of using a centralized exchange or complex conversion method. Furthermore, this time Solana was the only one to be affected by the hack, but there are chances that Terra blockchain can face the problem next time because it has the same vulnerabilities as Solana Bridge.
Arriving with zero-knowledge
Solana has gone through rapid growth since its launch, but the network has been going through major issues, and the more users started joining the platform, the more these issues started to escalate. The network faced a total of six outages in the month of January, and the bad start has caused a lot of frustration in the community.
Solana, like any other smart contract networking platform, uses a monolithic architecture that is not able to provide for economies of scale. For this reason, the fees and resources keep the network stable, decentralized and secured as more users start to onboard the platform. But there is a possible alternative that can resolve the issue, the scale can be known through the use of a modular architecture. Big industry players of this field like Ethereum and Syscoin are slowly shifting in this direction.
Zero-knowledge (ZK) proofs are currently the best solutions for cross-chain assets. It is a better alternative rather than having your liquidity pool stay on external consensus like multi-party protocol. This kind of protocol requires the honest maximum assumption of superficial validators.
This enormous hack can be considered the sign for developers to look out for bridging protocols and smart contracts networks so that they can proceed with wariness while dealing with cross-chain smart contracts. Also, they need to work on regular updates, bug bounties, audits, and other loopholes that can hamper the operations.