Nomad, a cross-chain token bridge, was exploited on Monday, with attackers effectively stripping the protocol of all funds. The total amount of cryptocurrency lost as a result of the attack was approximately $200 million.
Nomad, like other cross-chain bridges, allows users to send and receive tokens between different blockchains. Monday’s attack is the latest in a string of highly publicized incidents that have drawn the security of cross-chain bridges into question.
The Nomad team acknowledged the exploit in a statement to CoinDesk. “An investigation is ongoing and leading firms for blockchain intelligence and forensics have been retained,” the team said. “We have notified law enforcement and are working around the clock to address the situation and provide timely updates. Our goal is to identify the accounts involved and to trace and recover the funds.”
Bridges typically work by locking up tokens in a smart contract on one chain and then reissuing those tokens in “wrapped” form on another chain.
If the smart contract where tokens are initially deposited gets sabotaged – as happened in Nomad’s case – the wrapped tokens no longer have any backing, which can render them worthless.
Unlike some bridge attacks, where a single culprit is behind the entire exploit, the Nomad attack was a free for all.
Bridge attacks have become more frequent in recent months as crypto users have demonstrated an increased appetite for swapping assets between different blockchains.
While cross-chain bridges have made it possible for upstart blockchains to proliferate, bridge failures can be devastating for smaller chains that rely on them for a large amount of their total liquidity.
Evmos, one of the newer blockchains serviced by Nomad, tweeted that it would be “brainstorming community solutions” to the Nomad attack given that it “significantly impacts initial Evmos [total value locked].”
The largest decentralized finance (DeFi) attack in history, April’s Ronin bridge attack, saw over $600 million worth of crypto siphoned out of the bridge that powers the blockchain-based game Axie Infinity.
Just a few months before that, over $300 million was drained from the Wormhole bridge, wreaking havoc across the Solana blockchain community and the wider decentralized finance ecosystem.
Nomad sold investors on the vision that it would be fundamentally more secure than alternative platforms.
Just last week, it was revealed that cryptocurrency giants Coinbase Ventures and OpenSea had entered an April seed round, with the company valued at $225 million.
