What are the risks of using cross-chain bridges?

What are the risks of using cross-chain bridges
The blockchain landscape is a bustling metropolis of independent networks, each with their own strengths and purposes. Bitcoin — the grandchild of them all — is renowned for its security, Ethereum is known for its robust smart contract ecosystem, and Solana is known for its blazing transaction speeds.

But what if a crypto citizen wants to seamlessly move assets between these vibrant neighborhoods? Decentralized finance (DeFi) should not be limited to individual chains, and cross-chain bridges are ingenious software applications that facilitate interoperability between blockchains.

Here are some key concerns that continue to plague this evolving technology:

Cybersecurity vulnerabilities
Unfortunately, the code that powers hyperlinks also makes them susceptible to hacking attempts. Two high-profile exploits highlight this risk.

Ronin Bridge breach
In 2022, hackers breached the Ronin Bridge, consuming $600 million worth of cryptocurrency. The exploitation targeted a private key multisignature scheme, a security measure that ultimately proved inadequate.

Wormhole bridge vulnerability
In early 2022, the Wormhole Bridge fell victim to a $325 million robbery. The criminal exploited a vulnerability in the bridge's smart contract code and exposed a flaw in the system's logic. These incidents required rigorous audits, secure coding practices, and robust bug bounty programs to harden bridges against potential attacks.

Lack of traceability
Unlike traditional financial systems, Blockchain transactions can be pseudonymous. While a fundamental principle of blockchain technology, this anonymity poses challenges when assets are transferred across chains. Tracking the movement of illicit funds across bridges can be a challenging task for law enforcement and regulatory agencies.

This limitation of bridges can be used by hackers to move funds anonymously between blockchains without researchers being able to track them.

Centralization concerns
Over the years and the postmortems of multiple hacks, several bridges have increased decentralization. While some bridges operate in a decentralized manner, others are more centralized, often introducing a single point of failure and compromising the trustworthy nature of the blockchain.

Mitigating risks surrounding cross-chain bridges
The blockchain community is actively exploring solutions to address the above-mentioned risks. The following are some promising avenues being pursued:

Decentralized bridge architecture
Moving towards fully decentralized bridges, where governance and operation are distributed to a broader network of participants, can significantly improve security and reduce reliance on trusted third parties.

The decentralized bridge network that forms these bridges is incentivized through launched tokens. For example, Wormhole recently announced its token program to promote its ecosystem.

Official verification techniques
Formal verification—using the accuracy of software code—can help identify and eliminate vulnerabilities in bridge smart contracts before deployment.

Standardization and interoperability
Standardizing communication protocols between bridges can increase seamless interoperability and potentially reduce some of the traceability challenges. Projects such as IBC are taking steps in this direction. IBC enables secure, reliable communication and asset transfers between independent blockchains.

Chained utopia
The future of blockchain depends on interconnectivity. Cross-chain bridges hold the key to unlocking a truly interoperable ecosystem where users can leverage the unique advantages of each blockchain without friction. Since Web3 includes billions of users, they must be agnostic to the blockchain where their transactions occur.
Here are some improvements that bridges should strive for in the coming years:

Improved user experience
Bridges should be more user-friendly and offer intuitive interfaces that simplify the asset transfer process even for non-technical users. To achieve this, the concepts of wallets, chains, and bridges need to be integrated into a more Web2-like experience. For example, DeFi users should be able to exchange assets between chains from a simple interface.

Robust security
With the adoption of advanced technologies such as robust security practices, constant vigilance, better smart contract governance and official verification, bridges can become security bastions. Completely decentralized bridges managed by a distributed network of validators may become the norm, eliminating the risks associated with centralized control.

The ideal future envisions a blockchain landscape where users can move seamlessly between chains, make transactions effortlessly, and leverage the power of the entire ecosystem without being aware of the underlying infrastructure.