Wormhole hack illustrates danger of DeFi cross-chain bridges

cointelegraph.com:

Solana has become one of the fastest-growing smart contract blockchain networks since it was first officially launched in March 2020. 

The total value locked (TVL) on decentralized finance (DeFi) protocols on the network grew from nearly $152 million in March 2021 to $8.08 billion at the time of writing, as per data from DefiLlama.

Simultaneously, the network has also been subject to several network issues and outages. Most recently, the Wormhole token bridge was hit by a security exploit on Feb. 3 that culminated in the loss of 120,000 wrapped Ether (wETH) tokens, worth over $375 million at the current price of Ether (ETH). 

This exploit was the biggest so far in 2022 and the second largest DeFi hack ever, following the Poly Network hack where over $600 million was stolen from three different blockchain networks when an Ethereum bridge was compromised.

Wormhole is a token bridge protocol that connects multiple blockchain networks like Ethereum, Solana, Terra, BNB Smart Chain, Polygon, Avalanche and Oasis. It enables users to send and receive tokens between these networks without the need for a centralized exchange or tedious conversion processes. While wrapped Ether was the only asset impacted by this exploit, Certik, a smart contract auditing firm, mentioned that Wormhole’s bridge to the Terra blockchain network could be impacted by the same vulnerability as the Solana bridge. 

The token bridging protocol has released a detailed incident report that tracks the chronology of the hack and all the associated aspects of it including security audits, bug bounties and the security roadmap. Cointelegraph discussed this hack with Max Galka, the CEO of blockchain data analytics firm Elementus. He said:

Galka further mentioned that