Wormhole Bridge Hacked for $320 Million, Whilst Quant Rallies

GB Market Commentary 3/02/2022

by Marcus Sotiriou

Bitcoin fell last night along with the US stock market in after hours, following a disappointing Facebook earnings report. Large amounts of Bitcoin that was stolen from Bitfinex exchange six years ago was moved on Tuesday, which has created more fear in the market. Blockchain analytics firm Elliptic said that $3.55 billion worth of Bitcoin has been moved in 23 transactions. As most of the Bitcoin is blacklisted and substantial sells would draw unwanted attention, the hackers will have great difficulty in selling the stolen Bitcoin, so I think this presents little downside risk.

A cross-chain bridge between Ethereum and Solana, called Wormhole Bridge, was exploited yesterday by an attacker, resulting in the loss of 120,000wETH tokens (equalling around $320 million). This is the second-largest DeFi hack to date. The bridge allows users to send and receive crypto between various blockchains like Ethereum, Solana, Polygon, Avalanche, BSC, Terra, and Oasis. Vitalik Buterin (co-founder of Ethereum) highlighted his concerns with cross-chain bridges last month saying, "My argument for why the future will be *multi-chain*, but it will not be *cross-chain*: there are fundamental limits to the security of bridges that hop across multiple zones of sovereignty." I agree with this thesis, and that wrapped cryptocurrencies on other chains (in this case mentioned it is wrapped Ethereum on Solana) can never be as secure as native chain assets.

The events which unfolded last night could have helped instigate the surge for Quant (QNT), which rallied over 20% against the market. This is because Quant aims to deliver a multi-chain solution that allows users to build decentralised apps which are not dependent on a single blockchain. Quant’s goal of connecting blockchains and networks on a global scale is an ambitious one, but if successful it paves the way for incredible upside. The market clearly thinks that Quant is a surer bet to achieve that goal after last night’s hack, as it has experienced a significant uptick in buy volume over the past 24 hours.