Ppt

1. Wormhole Bridge Attack
Presented By: Group 7
Manasvi Agrawal 302/2021
Ankit Prakash 307/2021
Rithik Tiwari 323/2021
Himanshu Bansal 328/2021
Tushar Garg 341/2021

2. Blockchain Bridges
• Blockchain Bridges work just like the bridges we know in a physical world.
Blockchain Bridges connects two blockchain ecosystems.
Need of bridges
• All blockchains have their limitations. all blockchains develop in isolated
environments and have different rules and consensus mechanisms. This
means they cannot natively communicate, and tokens cannot move freely
between blockchains.
• Bridges exist to connect blockchains, allowing the transfer of information
and tokens between them.

3. Bridges enable:
• the cross-chain transfer of assets and information
• dapps to access the strengths of various blockchains – thus enhancing
their capabilities (as protocols now have more design space for
innovation).
• users to access new platforms and leverage the benefits of different
chains.
• developers from different blockchain ecosystems to collaborate and
build new platforms for the users.

4. Types of Bridge
Trusted Bridges
Trusted bridges depend upon a central entity or
system for their operations.
Users need to give up control of their crypto assets.
They have trust assumptions with respect to the
custody of funds and the security of the bridge.
Users mostly rely on the bridge operator's
reputation.
Trustless Bridges
Trust less bridges operate using smart
contracts and algorithms
Through smart contracts, trust less
bridges enable users to remain in control
of their funds.
They are trust less, i.e., the security of the
bridge is the same as that of the
underlying blockchain.

5. Risk
Using
Bridges
• Interacting with any type of bridge carries
risk: Smart Contract Risk; Technology Risk
• Moreover, since trusted bridges add trust
assumptions, they carry additional risks
such as: Censorship Risk; Custodial Risk
User's funds are at risk if:
• there is a bug in the smart contract
• the user makes an error
• the underlying blockchain is hacked
• the bridge operators have malicious intent
in a trusted bridge
• the bridge gets hacked

6. HOW WORMHOLE
WORKS
• Wormhole is a ‘bridge’ that efficiently facilitates the movement of digital
assets from one blockchain to another blockchain network.
• The portal helps users operating on top-tier decentralized channels like
Ethereum, Binance, Solana, Polygon, Oasis, etc., to communicate with each
other via a transparent interface.
THE PROCESS:
• Send the message to the Wormhole ecosystem
• The Guardian nodes scrutinize the transaction
• Within seconds, the nodes manage to reach the Quorum
• The Guardian nodes make the attested message publicly accessible
• Access the message on the destination chain

7. About the scam-Wormhole Bridge
 On Wednesday, Feb 2nd the decentralized finance (DeFi) platform Wormhole became the
victim of the 3rd largest cryptocurrency theft in 2022.
 It was among the top five largest crypto hacks of all time when an attacker exploited a security
flaw to make off close to $325 million.
 Wormhole provides a service known as a bridge between blockchains, an escrow system that
allows one type of cryptocurrency to be deposited in order to create assets in another
cryptocurrency.
 It acts as connecting services that allows users to send and receive crypto between Ethereum,
Solana, Binance Smart Chain (BSC), Polygon, Avalanche, Oasis and Terra without the use of
a centralized exchange.
 This allows a person or entity with holdings in one cryptocurrency to make trades and
purchases using another, like being able to fund a bank account in dollars and then use a
bank card to buy something priced in euros.

8.  The attacker managed to forge a valid signature for a transaction that allowed them to
freely mint 120,000, a wrapped Ethereum equivalent on the Solana blockchain, with value
upto $325 million at the time of the theft .
 The hacker has since used some funds to buy SportX (SX), Meta Capital (MCAP), Finally
Usable Crypto Karma and Bored Ape Yacht Club Token (APE).
 Wrapped Ethereum was then exchanged for around $250 million that was sent from
Wormhole to the hackers account, liquidating large amount of the Ethereum funds that
that were held as collateral for transactions on the Solana blockchain.
 Due to the nature of cross-chain applications, the attack temporarily left a huge deficit
deficit between the amount of wrapped Ethereum and regular Ethereum held in the
Wormhole bridge, as if the collateral asset backing a loan had suddenly disappeared.

9.  According to Forbes, the attack caused a 10 percent drop in the value of
the Solana cryptocurrency in the aftermath of the hack.
 The Wormhole team has announced that more Ethereum will be added
to the bridge to replace the stolen collateral funds, effectively meaning
that the company will need to find $325 million in assets to plug the gap.
 At this stage, it is unclear where the funds will come from. The
Wormhole team also contacted the hacker through their Ethereum
address, offering to let the hacker keep $10 million worth of funds stolen
if the remaining funds are returned.

10. CURRENT
STATUS
OF SCAM
WORMHOLE HACKER MOVES $155M OF STOLEN
FUNDS – 23 JAN 2023
• The hacker shifted a large chunk of stolen funds,
with transaction data showing that $155 million
worth of Ether was transferred to a decentralized
exchange (DEX) on Jan 23.
• According to the transaction history of the
hacker’s alleged wallet address, the latest activity
shows that 95,630 ETH was sent to the
OpenOcean DEX and then subsequently
converted into ETH-pegged assets such as Lido
Finance’s staked ETH (stETH) and wrapped staked
ETH (wstETH).
• Transaction history also highlighted that the
hacker went on to conduct a slew of odd-looking
transactions.

11. For example, the hacker used their
stETH holdings as collateral to
borrow 13 million worth of the
DAI stablecoin, before swapping it
out for more stETH, wrapping it
into stETH again and then
borrowing some more DAI.
The hacker’s hefty ETH transaction
appears to have had a direct
impact on the price of stETH.
The asset’s price went from
slightly under peg of 0.9962 ETH
on Jan. 23, to as high as 1.0002
ETH the following day, before
dropping back to 0.9981 on jan 24.

12. WORMHOLE HACKER MOVES ANOTHER $46M OF STOLEN
FUNDS – 12 FEB 2023
The hacker has transferred an
additional $46 million of stolen funds
from their wallet, according to on-
chain data.
This was made up of around 24,400
Lido Finance-wrapped Ethereum
staking token (wstETH), worth
approximately $41.4 million, and 3,000
Rocket Pool Ethereum staking token
(rETH), worth about $5 million, which
was moved to MakerDAO.
The hacker appears to be seeking yield
or arbitrage opportunities on their
stolen loot as the assets were
exchanged for 16.6 million DAI.
The MakerDAO stablecoin was then
used to buy 9,750 ETH priced at
around $1,537 and 1,000 stETH. These
were then wrapped back into 9,700
wstETH.

13. HOW CRYPTO HACKS CAN BE
REDUCED
• Before investing in any crypto project, it is important to conduct thorough research to ensure that
the project is legitimate. Investors should look for independent reviews and analysis and
investigate the background of the team behind the project.
• Investors should be cautious of any project that promises high returns in a short period of time. If
an investment opportunity sounds too good to be true, it probably is.
• They should only invest in crypto projects that are listed on reputable exchanges. They should
avoid investing in projects that are not listed on any exchanges or are only listed on obscure or
unregulated exchanges.
• Information about a crypto project should be seen from trusted sources, such as reputable news
outlets or independent analysts.
• Sometimes searching keywords about crypto shows promoted ad websites that are actually
phishing operations. Users need to be diligent on what they are clicking on relating to the term.

14. Thank-You…