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2022 Cross-Chain Bridge Hack Incident Overview | TVL Plummeted After Hacks, Layer 2 Share Continues to Rise

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2022 Cross-Chain Bridge Hack Incident Overview | TVL Plummeted After Hacks, Layer 2 Share Continues to Rise

In this era of flourishing and diverse blockchains, cross-chain asset transfer has been a pressing industry need. In the past year, the Total Value Locked (TVL) on the entire Ethereum cross-chain bridge reached as high as $25 billion. However, due to security limitations and frequent hacking incidents, cross-chain bridges seem to be increasingly associated with "risk."

Earlier this year, Ethereum founder Vitalik expressed his view that there will be a future with multiple chains (multi-chain) but not a future with cross-chain capabilities. He mentioned that as more assets are involved in cross-chain bridges, the motivation for attacks increases, and large mining pools are more likely to engage in collaborative attacks.

This article will list some of the more well-known cross-chain hacking incidents that occurred this year, and summarize the current cross-chain bridge data.

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2022 Cross-Chain Bridge Hacking Incidents

1. Multichain: Loss of Approximately $5.7 Million

The cross-chain protocol Multichain, formerly known as AnySwap, issued a notice on 1/18, stating that the protocol had discovered a vulnerability which had been patched by the team. The official warning advised users who had previously approved specific six tokens on the router to revoke them to avoid asset exposure risks.

Although the official statement claimed no issues, it was later found that the vulnerability had been exploited by hackers, and the attack had been ongoing for a period of time. Excluding the returned amount of ETH, the total loss amounted to approximately 1,778 ETH, which was valued at around $5.7 million at that time.

2. Wormhole: Loss of Approximately $320 Million

The cross-chain protocol Wormhole announced on 2/3 that the protocol was under maintenance due to investigating potential hacker attacks. Shortly after, the official confirmation revealed that the hacker attack was genuine, with 120,000 wETH being hacked, resulting in a total loss of approximately $320 million at that time.

3. Ronin: Loss of Approximately $616 Million

Axie Infinity's sidechain Ronin experienced a breach on 3/30 when five validators' private keys were compromised, allowing hackers to freely withdraw assets on Ronin. The total loss at that time included 1.736 million ETH and 25.5 million USDC, making it the highest amount lost in history, valued at approximately $616 million.

This incident even led to the official cross-chain bridge being unable to facilitate deposits and withdrawals for three months, and user funds were fully compensated only after funding from institutions such as Binance, Animoca Brands, and a16z.

4. Horizon: Loss of Approximately $100 Million

The public chain Harmony ONE announced on 6/23 that its cross-chain bridge Horizon had been hacked, resulting in a loss of approximately $100 million. In the subsequent report, the team stated that about 50,000 wallets were affected, and the hack was attributed to leaked private keys.

5. Nomad: Loss of Approximately $190 Million

The hacking incident involving the cross-chain protocol Nomad occurred on Tuesday 2, and unlike the aforementioned attacks, this incident involved a wide range of attackers, referred to as the first-ever "decentralized robbery event."

Due to verification vulnerabilities in the contract, individuals were able to steal assets by simply copying the transaction data initially called by the hackers. Excluding the returned funds, the total loss was approximately $190 million.

Cross-Chain Bridge Data Overview

According to data from Dune Analytics here, the cross-chain bridges with significant hacking losses experienced a snowballing decline in Total Value Locked (TVL) following the incidents, showing no signs of recovery, which seems to have damaged user confidence.

Wormhole Incident on 2/3

Ronin Incident on 3/30

Horizon Incident on 6/23

Overall, the TVL of cross-chain bridges has plummeted by over 60% from its peak due to the frequent hacker incidents and the overall decline in the crypto market, with the current TVL standing at around $9.1 billion.

However, while most cross-chain bridge TVLs are gradually shrinking, the TVLs of Optimism and Arbitrum's bridges remain relatively stable, with Optimism even showing continued growth.

The current TVL for Optimism's cross-chain bridge is approximately $850 million, while Arbitrum's is around $2.5 billion.

Polygon has consistently shown the most stable development and holds the highest TVL among all cross-chain bridges. Its current TVL is approximately $4.2 billion, accounting for 46.3% of the total share, followed by Arbitrum at 27.1% and Optimism at 9.4%.

Additionally, stablecoins dominate the assets on cross-chain bridges, with USDC and USDT accounting for 35.9% and 12.5% respectively, while WETH and ETH make up 22.6%, and Polygon's native token Matic holds 8.2%.