An Interoperable Web 3.0 Without Proper Security Is a Disaster Waiting To Happen

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Interoperability is crucial for the development of Web 3.0 technologies and the wider crypto ecosystem.

Without interoperability, users are limited to using a single blockchain, preventing them from connecting with other networks and taking advantage of the various benefits that come with a more open and interconnected system.

However, Web 3.0 is only as secure as the systems that support it, and without proper security, a permissionless and trustless future is a disaster waiting to happen.

The bridge – the most dangerous place in crypto

A bridge is by nature a continuation of a blockchain, and as such, it should fully satisfy the core requirements of blockchain – being trustless, decentralized and secure.

This concept became known as the interoperability trilemma, and it requires bridges to be trustless, extensible and agnostic (able to transfer any type of data supported by chains).

The nature of cross-chain transacting creates more points of failure, and therefore, higher security risks compared to interacting within a single network.

While security issues are not fully solved within individual networks, bridges present extra challenges.

Regardless of how the specific bridge is designed, the funds have to be locked up in a smart contract or with a centralized custodian, which in turn becomes a honey pot for black-hat hackers.

Smart contracts that execute across multiple blockchains are more complex, making them susceptible to errors and malicious attacks.

In fact, cross-chain bridges are the victim of 50% of DeFi exploits. In the last two years, approximately $2.5 billion has been stolen by hackers by exploiting their unique vulnerabilities.

Breaches happened with some of the most well-known ecosystems – Poly Network (a Polygon cross-chain protocol), Ronin (the home of Axie Infinity) and Horizon (the Harmony protocol bridge), among others.

The Wormhole Bridge exploit was the second biggest attack after the Ronin exploit. The hacker made off with roughly $320 million after finding a flaw in the smart contract code of this bridge between Ethereum and Solana that allowed them to mint 120,000 Wrapped Ethereum on Solana without putting up the necessary equivalent Ethereum collateral.

The Nomad exploit was made possible by a misconfiguration of the smart contract that allowed anyone with a basic understanding of the code to authorize withdrawals for themselves, which people did.

This led to what was