As an increasing number of blockchain protocols are launched, each with their own efficiencies, benefits, and areas of focus, investors and users are increasingly interested in transferring assets and cash between them. Implementing blockchain bridges – also known as token bridges – is key to creating interoperability and enabling the exchange and flow of digital assets, enabling greater liquidity between blockchains.
However, with the rush to deal with pressure to enable cross-chain liquidity, the security technology that underpins many blockchain bridges was initially relatively weak. Many bridges have a single trusted operator with the power to intercept or interfere with the token transfer.
Truly trustless bridges, which do not require users to trust a centralized or federated group of operators, can solve pressing security issues for bridges and their users. Trustless bridge solutions are essential for the long-term vitality of bridges and blockchains themselves.
Approach the problem
The main problem with low-security blockchain bridges is that they undermine the benefits of using a transparent and decentralized system, which makes blockchain so open, efficient, transparent, and special in the first place. The Wormhole Bridge attack in February and the Ronin Bridge robbery in March compromised a combined $1 billion in assets, illustrating what can go wrong when bridges are not securely architected.
Typically, bridges work by locking tokens on one blockchain and creating new equivalent tokens on another, which ensures that tokens don’t leave their respective blockchains during a transaction. The tokens are usually deposited into a bridge smart contract on the first blockchain, where they are locked and will be unlocked when the transaction rolls back. Locked token pools represent a honeypot for any hacker, and when compromised, the value of all unsaved wrapped tokens on the destination chain are called into question.
While this issue was raised in Algorand‘s last Decipher conference in November 2021, the extremity of the subsequent Wormhole and Ronin bridge attacks, as well as the fact that the value of assets held on blockchain bridges, has reached more than $32 billion since the start of 2021, points out that swift action must be taken to implement a more secure bridging solution for the blockchain industry.
Provide a solution
Trustless bridge solutions are the most secure way to design and build these bridges because they do not require the participants involved to know or trust each other or a third party for the system to be secure.
For example, Applied Blockchain and Algorand are collaborating to develop a trustless cross-chain bridge that will initially use Intel’s security properties‘s hardware security enclave (SGX) and will later use a new cryptography feature called Proofs of State when it becomes available in Algorand. State proofs are an immutable series of proofs that verify the state of the assets held on its blockchain. This allows smart contracts on the target chain to process transactions from the Algorand chain.
Trustless cross-chain technology seeks to eliminate the need for intermediaries or third parties to connect two blockchain networks, thereby improving interoperability and adhering to the principle of blockchain technology‘s decentralization.
Proofs of state will help connect Algorand to the wider blockchain world, allowing users to transact cross-chain efficiently, cost-effectively, and securely. Therefore, they will also provide a model for other cross-chain solutions seeking to close the security gaps of more centralized systems.
Next-generation security measures such as proofs of state under development in Algorand (ALGO) will be essential for the long-term viability of blockchain bridge projects. They will solve an urgent security problem and therefore encourage both users and investors to use these solutions to transfer their assets from one chain to another.
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