With crypto, tech, and growth sectors down considerably over the last couple of months, a hack affecting some of the most popular cryptocurrencies is not what investors were looking for. In crypto’s latest news, in another in a string of high-profile heists, it appears that hackers targeted the more sensitive bridge connecting the Solana and Ethereum (ETH) blockchains on Wednesday.
This bridge, known as the Wormhole protocol, provides a method of transferring a user’s non-fungible tokens (NFTs) from one blockchain to the next, though it has been noted by prominent voices like Ethereum founder Vitalik Buterin for its security limits.
As the second largest heist in decentralized finance history, this theft left the unknown hackers making away with about $325 million. The high-profile attack was validated on Wormhole’s twitter account, although the company stated that the backing funds have been replaced.
Connecting the two blockchains is useful as not all actions are able to be performed on every platform. Solana is noted for its convenience in relation to Ethereum, though the latter is more widespread and accepted.
The security breach stems from the bridge’s operational method. In that, the Wormhole protocol allows coins to be transferred between platforms by locking on tokens to smart contracts on one side of the bridge, then creating an equivalent token on the other side. The hackers exploited this by creating 120,000 pegged “wrapped” tokens which equaled a 1:1 ratio to Ethereum coins, and claimed about 93,750 ETH in the process.
Cybersecurity has long been a flourishing industry, especially after recent large-scale attacks on government and private entities. However, it appears the cryptocurrency security industry is just as important, especially for the future of the coins in question.
Crypto brokerage and trading firms understand this, which is what led Coinbase (COIN) to purchase Israeli-based cryptographic security firm Unbound Security for an estimated $150 million. This acquisition was announced in late-November 2021.
Wormhole has since offered a bug bounty of $10 million to the hackers in exchange for details of the exploit, as well as the return of their looted ETH.
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