Second-biggest crypto hack attacks Wormhole bridge. Can we trust DeFi blockchain technology?
The second-largest decentralised finance (DeFi) hack occurred this week in an attack that swiped $320 million (€279 million), or 120,000 Ether, highlighting the growing trend of attacks on cryptocurrency platforms and concerns over security.
Wormhole, one of the most popular bridges which links the Ethereum and Solana blockchains, was hacked on Wednesday.
Solana felt the full effect of the heist and shed about 10 per cent off its price.
It is not the first time such a heist has happened. Just last week, hackers made off with $80 million (€70 million) from DeFi protocol Qubit Finance.
The biggest hack took place last August when $600 million (€525 million) worth of tokens was stolen from the Poly Network platform.But in a strange twist, the attacker then returned nearly all of the money as their aim was to expose the flaws in the system.
Such hacks are posing questions around the security of DeFi, an emerging financial technology that has programmable pieces of code known as smart contracts that can replace middlemen like banks and lawyers in transactions.
A bridge is a protocol that allows users to “bridge” or move assets such as cryptocurrencies, tokens and NFTs across different blockchains. It works by locking a transaction.
Crypto holders do not usually operate within just one blockchain ecosystem and so developers have created bridges to fill this void.
Wormhole has more than $1 billion (€875 billion) in total value locked and supports six blockchains: Terra, Solana, Ethereum, Binance Smart Chain, Avalanche and Polygon.
According to Dr Merav Ozair, a leading blockchain expert and a FinTech Professor at Rutgers Business School in Washington, the hack happened on the “bridge,” which is Layer 2, not Layer 1.
Layer 1 is the term
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