How Magpie Is Solving the Blockchain Bridge Problem
Why are blockchain bridges so vulnerable to cyber threats? In the crypto space, this is known as the ‘billion-dollar bridge problem’ and it’s a growing issue for DeFi developers.
Back in August 2021, the biggest cryptocurrency heist up to that date saw $600 million worth of digital assets stolen from Poly Network — a DeFi protocol focused on cross-chain asset swaps — only for the hacker to return the stolen assets a short while later.
Less than a year later in March 2022, the largest crypto theft in history resulted in $625 million worth of digital assets stolen from the Ronin Bridge — a cross-chain bridge used by Axie Infinity players to transfer assets from Ethereum to the Ronin network. These persistent attacks proved that DeFi apps are only as robust as their underlying cross-chain bridges.
Blockchain’s Billion-Dollar Bridge Problem
Adding up all the other cyber attacks and exploits, blockchain bridge hacks have amounted to over $1 billion worth of cryptocurrency within a single year, hence the ‘billion-dollar bridge problem’.
Factoring in the tumultuous macroeconomic landscape and uncertain regulatory frameworks arising worldwide, the increasing bridge exploits have caused some significant harm to the mainstream reputation of DeFi applications, especially for institutions.
As developers look to create more robust cross-chain solutions, the billion-dollar question on everyone’s mind is: Why are blockchain bridges so vulnerable to cyber attacks? In large part, it’s due to these being some of the most complex architectures in the blockchain space.
A standard bridge receives a crypto transaction in a particular cryptocurrency, say Bitcoin, which it locks up as a deposit and releases the same amount of Wrapped Bitcoin on the Ethereum network. Add in that bridges offer this functionality across thousands of possible cross-chain combinations and the likelihood of a bug in the code increases drastically.
Since many cryptocurrencies are built on different programming languages and have completely different ecosystems, bridge vulnerabilities grow with every new chain, which, according to Ethereum founder Vitalik Buterin, can endanger the entire blockchain ecosystem.
Meaning that cross-chain bridges can even spread the vulnerabilities of a particular blockchain ecosystem to an entirely different chain. In the same post, Buterin also highlighted that the security limits of current bridges are the reason why he is “optimistic about a multi-chain future” but “pessimistic about cross-chain applications.”
Since bridges handle some of the most complex cross-chain operations, it’s easier for hackers to find points of exploit in their functionality and the more assets that are locked in a bridge, the more tempting it is to find an exploit since there is no way a hacker could steal those assets from their native blockchain.
So in essence, standard cross-chain bridges increase the potential attack surface for hackers due to their complex architecture. Since bridges are often built by smaller teams in a different way than the chains they connect, the code isn’t as thoroughly audited as with a major blockchain.
How Magpie Is Solving the Blockchain Bridge Problem
Born out of necessity to create a safer cross-chain environment, Magpie is aiming to solve blockchain’s billion-dollar bridge problem, by making cross-chain asset swaps more secure and efficient.
To do so, we had to reinvent the fundamental mechanics of blockchain bridges and look at the technology’s biggest vulnerabilities. So how did we manage to do that?
First and foremost, by making cross-chain asset swaps non-custodial — meaning that your digital assets are never held on a blockchain bridge. Instead, Magpie only leverages cross-chain bridges as a messaging service, using the Wormhole Guardian Network to communicate asset swap signals between blockchains.
Once the asset swap has been signaled and verified through 19 Wormhole Guardian Nodes, the Magpie network on the target chain receives the confirmation, and your requested assets are released from our chain-specific liquidity pool.
In simple terms, this means that your cryptocurrency will never be subject to the vulnerability of a cross-chain bridge since it will never be in the custody of the bridge in the first place. Magpie is the first truly non-custodial cross-chain bridge, and since Magpies don’t migrate, neither do assets on our protocol.
Towards a Safer Cross-Chain Ecosystem
At press time, the total value-locked (TVL) across all cross-chain bridges exceeds $72 billion, down from an all-time high of over $253 billion back in December, according to data by DefiLama. It’s only natural for such a rapidly growing industry to attract its share of malicious actors.
As cross-chain applications gain more ground in our daily lives, non-custodial blockchain bridges will likely become the industry standard, eradicating bridge exploits and the vulnerabilities of custodial solutions.
Until that day comes, Magpie will be at the forefront of bridge development, making cross-chain asset swaps user-friendly, secure, and more efficient.
