Although 2021 was the year of decentralized finance, it was also affected by several hacks and security incidents. Cross-chain bridges in particular pose a significant threat to user funds.
The portal takes a very different approach to cross-chain value transfer by leveraging the bitcoin network.
Funds are not secure with a cross-chain bridge
If there is one lesson for DeFi enthusiasts to remember, it is how cross-chain bridges pose a significant risk. There have been half a dozen incidents over the past few months, all of which have put user funds at stake.
Although the amount of money lost to hackers is somewhat limited, these exploits should not be allowed to exist in the first place.
Wasn’t the wormhold replenished to 120,000 ETH for the hackers who returned over $600 million to Poly Network and Jump Crypto; The situation will be very bad.
The potential loss of funds is a serious threat to the decentralized finance industry. While this technique makes sense to move value between chains, the model introduces unnecessary moves and risks.
Wrapping tokens, creating assets on another chain, using validators, and other centralization aspects make this model counterproductive and unstable. This is not viable in a decentralized industry.
Neil Player of crypto security engineering firm Staghead Crypto says:
“Cross-chain bridges present a unique set of security risks and exploits like these are no surprise. It is a reminder of how bleeding edge is the lot of applications running on top of the blockchain. Similar to what happened at the wormhole. Exploitation is expected to cause growing pain as the technology and technology associated with bridging assets mature.”
The introduction of the centralization aspect puts user funds at risk. Plus, it shows how bad things can get when developers forget to validate all “guardian” accounts like Wormhole.
Although that aspect has now been sorted out, its very existence raises the eyebrows of many in the first place. When decentralization and trust are not 100% guaranteed, cross-chain bridges are not the solution people are looking for.
A Different Approach by Portal
Now that it is clear that cross-chain bridges are a security risk, new solutions need to be found.
The team behind the portal has taken a different approach, while still letting users exchange value across different networks. The portal is a cross-chain DEX built on bitcoin and does not require any wrapped tokens or third-party custody.
Instead, all transactions rely on a peer-to-peer approach. Both the parties lock the funds during the process of the transaction. If all goes well, the values will be exchanged directly between peers.
However, if there is a problem, the transaction is rolled back, and the participants keep their original assets. A straightforward approach that does not introduce centralization in any way removes the attack vectors affecting cross-chain bridges from the equation.
The portal lets users trade native layer-1 assets across different blockchains through its peer-to-peer swapping approach.
Not dealing with wrapped tokens or validators that process transactions is an important step. Furthermore, the peer-to-peer aspect ensures that there are no unexpected delays, blocked funds, exploits or other loopholes when using cross-chain bridges.
It is necessary to search for value transfers that do not involve cross-chain bridges. Even Vitalik Buterin is concerned about the security of these bridge-based solutions and how a 51% attack could affect them.
A blockchain can recover 51% of attachments faster, but a cross-chain bridge allows criminals to steal funds by placing tokens on another chain.
No further methods need to be introduced to put the users’ assets at risk in any way.