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Overview

Bridges are a revolutionary technology for the crypto space. The ability to interconnect blockchain networks that are otherwise isolated helps to build an accessible ecosystem for all crypto users while unlocking the broader potential of the ecosystem rather than just one single chain. While this technology and the ability to transact through ‘cross-chain’ infrastructure is critical, it comes with added risks, including colluding validators, compromised oracles, centralized relayers, and other dangers.

Bridge hacks have accounted for over $2 billion in lost or stolen funds, of which the Poly Network hack was the largest breach in crypto history. This hack surpassed the Ronin hack and Solana’s Wormhole bridge hack, where 120,000 wETH ($600+ million at the time) was stolen.

The Breach Explained

On August 10, 2021, the DeFi community was astounded when blackhat hackers made away with a staggering $600+ million from three Poly Network smart contracts situated on the ETH and BNB chains. To put the enormity of this heist into perspective, the stolen amount surpassed the Gross Domestic Product (GDP) of 191 nations.

The question lingering on everyone's mind was simple yet perplexing: How was this executed?

Unraveling the Technical Oversight

Within the intricacies of the Poly Network system lay a privileged contract dubbed EthCrossChainManager. This contract played a pivotal role in initiating messages received from other chains. One of its functions, verifyHeaderAndExecuteTx, had the dual role of verifying block header correctness and ensuring the inclusion of the transaction within that block.

Subsequent to this, the executeCrossChainTx funvtion was invoked, which enabled an external call to a variable referred to as _toContract. The oversight? This variable could be manipulated by any user, without any established checks or balances in place. In essence, any contract address could be input, and an external call, bearing custom bytes in the _method variable, could be executed.

The PolyNetwork breach occurred due to improper handling of access privileges to two crucial protocol smart contracts. The hacker was able to empty the Poly wallet after forcibly adding their public key as a maintenance key to the system. 

The heist culminated with the EthCrossChainManager contract calling EthCrossChainData, activating the function putCurEpochConPubKeyBytes.

The Aftermath

In an ironic twist, Poly Network, rather than being breached by an external force, was, in essence, led to sabotage itself. An amount exceeding 600 million dollars evaporated, marking a moment of introspection for the DeFi community.

This incident underscores the need for rigorous security audits, peer reviews, and continual refinement in smart contract design. As DeFi platforms continue their ascent in the financial world, such events serve as a reminder of the vulnerabilities that lie within and the importance of proactive measures to safeguard assets.