Riding The Wave News Summary #31
Ronin Attack Shows Cross-Chain Crypto Is a ‘Bridge’ Too Far, Hacker Moves Crypto Stolen From Ronin Breach to Help Cover Its Tracks, & more
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Table of Contents
Tweets
Hacker Moves Crypto Stolen From Ronin Breach to Help Cover Its Tracks
Worldcoin Promised Free Crypto If They Scanned Their Eyeballs With “The Orb.” Now They Feel Robbed.
Crypto trading to move to the Metaverse, says developer-focused study
Tweets
Ronin Attack Shows Cross-Chain Crypto Is a ‘Bridge’ Too Far
Crypto news seeped back into mainstream headlines last week with the disclosure of a $624 million heist from Axie Infinity’s Ronin Network. The attack targeted the Ronin Bridge, which enables users to pass funds between the Ronin network and Ethereum.
To some in the crypto world, the Ronin attack was evidence that the future of crypto, even if it is to be “multichain,” is unlikely to be “cross-chain.” With teams fleeing Ethereum for more centralized blockchains that are faster and cheaper, the Ronin attack also served as a reminder of decentralization’s importance.
Ronin is a sidechain, or parallel network, to Ethereum. Sky Mavis, the company behind the wildly popular play-to-earn game Axie Infinity, created Ronin in 2020 after realizing Ethereum’s base layer was too slow and expensive to handle all the transactions required to power such a game.
When you look under the hood, bridges like Ronin’s typically work by locking up cryptocurrency in smart contracts on one chain, and then re-issuing those tokens in “wrapped” form on a destination chain. So for example, if you were to use the Ronin Bridge to move ether (ETH) from Ethereum to Ronin, ETH would get locked up on Ethereum to serve as 1:1 backing for wrapped ether (WETH) issued on Ronin.
With so much money locked up in one place, bridges have become popular targets for thieves.
“The fundamental security limits of bridges are actually a key reason why, while I am optimistic about a multi-chain blockchain ecosystem … I am pessimistic about cross-chain applications,” Buterin wrote.
Sending assets across cross-chain bridges will never carry the same security guarantees as transacting within individual blockchain ecosystems, he explained in the 900-word post.
Much of Buterin’s critique of cross-chain bridges stems from the fact that they are particularly vulnerable to 51% attacks like the one that afflicted the Ronin network. If a bridge is attacked on one blockchain and drained of funds, users on the other end of the bridge – on a totally different blockchain – are also affected, since they will be left holding tokens that are no longer backed by anything.
In addition to highlighting the shortcomings of cross-chain bridges, the Ronin attack validated another core thesis among Ethereum devotees – one which is shared by bitcoiners and crypto-idealists in general – which is that true decentralization is vitally important to the success of any crypto ecosystem.
Sidechains are definitely a developing area, as the article points out they are needed in order for certain services to run due to Ethereums slow pace but by going off-chain they become vulnerable to attacks that Ethereum wouldn’t be. The upcoming merge might fix the speed issues but if not they will continue to be a necessity. I don’t expect the merge to fix all of the issues Ethereum faces surrounding performance so I don’t expect sidechains to disappear anytime soon.
If they eventually did disappear processes running on these side chains would need to work to migrate back to Ethereums main chain, a difficult but not impossible task.
Hacker Moves Crypto Stolen From Ronin Breach to Help Cover Its Tracks
A hacker moved some of the roughly $600 million in cryptocurrency stolen from the Axie Infinity play-to-earn gaming platform to a service that helps users mask transactions.
About 2,000 Ether tokens, valued at around $7 million, that were lifted from Axie Infinity’s Ronin software bridge last month were moved Monday to Tornado Cash, blockchain data shows. Tornado Cash founders did not respond Monday to a request for comment.
Tornado Cash is designed to preserve privacy on the Ethereum blockchain. Its technology breaks the link between the sender and receiver’s addresses on transactions sent to the Ethereum blockchain. The protocol has been used in the past by hackers who took $34 million from Crypto.com.
“Tracking funds after any mixer, including Tornado Cash, is a probabilistic method and we cannot be 100% certain,” blockchain analysis firm Merkle Science wrote in an email response.
When you steal crypto on-chain it’s as if you're trying to run away with money while the world watches. If you are stealing a small amount you arent likely to be caught but so far major thefts haven’t had much luck hiding their tracks as there are no perfect methods. Options like Tornado make the crypto harder to track but given enough time and effort authorities will likely be able to first track down potential suspects and then piece the story together working from there.
Worldcoin Promised Free Crypto If They Scanned Their Eyeballs With “The Orb.” Now They Feel Robbed.
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