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$2B in crypto stolen from cross-chain bridges this year: Chainalysis

Cross-chain bridge hacks have accounted for 69% of the total crypto stolen in 2022, amounting to $2 billion in losses, according to a new report. 

The report comes from blockchain analytics firm Chainalysis on Aug. 2, noting there have been 13 separate token bridge hacks this year — the most recent being the $190 million Nomad Bridge exploit.

Q1 2022 was by far the quarter that saw the most amount of crypto stolen since 2021, due mainly to the Ronin Bridge Attack in late March, which saw $624 million in Ether (ETH) and Circle USD (USDC) stolen.

Following last night’s exploit of the Nomad Bridge, an estimated $2B has been stolen from cross-chain bridges so far in 2022. Read our blog to learn what makes these protocols vulnerable and what the industry can do about it. https://t.co/WLo62H6NFe pic.twitter.com/CZRnqrPikh

— Chainalysis (@chainalysis) August 2, 2022

Cross-chain bridges, also known as blockchain bridges are designed to transfer cryptocurrencies from one blockchain network to another. 

Chainalysis explains that while bridge designs vary, users typically deposit their tokens from one chain to the bridge protocol which are then locked into a contract. The user is then issued the equivalent of a parallel token in another chain. 

Bridge vulnerabilities

According to the Chainalysis report, bridges are often targets because they “feature a central storage point of funds that back the ‘bridged’ assets on the receiving blockchain.”

“Regardless of how those funds are stored – locked up in a smart contract or with a centralized custodian – that storage point becomes a target.”

According to some experts, effective bridge design is still in its nascent stages of development, and some developers still have relatively little understanding of security protocols, making their protocols vulnerable to exploitation by hackers.

In a July 22 clip posted on Twitter, almost two weeks before the recent attack, Nomad founder James Prestwich says it will be “at least another year or two before there is enough familiarity across chain security models to build defenses as…

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