Bridges, chains and cross chain risk
Bridges are the most consistently exploited part of crypto. Understanding why tells you when to avoid them.
What a bridge does
Chains cannot talk to each other. A bridge locks your asset on one chain and issues a representation on another. That representation is only as good as the lock, which is a contract holding a great deal of value in one place.
Why they get attacked
A bridge concentrates enormous value in a single contract with complex logic. Ronin lost around 620 million dollars in 2022. Wormhole around 320 million. Nomad around 190 million. These are among the largest thefts in the industry and they cluster in bridges for exactly this reason.
Reducing the risk
- Prefer native issuance where it exists. Circle issues native USDC on many chains, which needs no bridge at all.
- Use the chain's official bridge rather than a third party one where possible.
- Only use a bridge linked from the project's own site. Fake bridge front ends are a common scam.
- Do not leave value sitting in a wrapped representation longer than you need to.
- Bridge a small test amount first when using anything new.
BEFORE YOU MOVE ON
Common questions
Why do bridges get hacked so often?
They concentrate very large sums in a single complex contract, which makes them the highest value target in crypto for the effort involved.
Is wrapped Bitcoin the same as Bitcoin?
No. It is a token on another chain that represents Bitcoin held by a custodian or contract. It carries that custodian's risk on top of Bitcoin's price risk.
Risk warning: crypto is highly volatile and largely unregulated. You can lose everything you put in. Nothing here is financial, investment or tax advice.