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Wormhole confirms all $320M in funds have been restored

192 points by ushakov 5y ago

baby 5y ago
Behind every project, there are people. https://twitter.com/KariyaKanav/status/1489351031125426180 https://twitter.com/KariyaKanav/status/1489351031125426180 gg to the people who worked on fixing this.
cheeze 5y ago
How does that work? If the money was moved to ETH, how did they restore the funds?
- Kranar 5y ago
  My speculation on this is that such a failure is catastrophic enough to destroy an entire blockchain. Solana has made billionaires out of a small group of people and they'd much rather fork over the 300 million dollars to plug this hole so as to preserve the remainder of their wealth, instead of having Solana crash to become worthless. While in principle a bug like this could have happened on Ethereum, or any programmable blockchain platform, ultimately this attack happened on the Solana blockchain and is an attack on Solana. The people who have a vested interest in seeing Solana survive will have coughed up the funds. Finally, it's worth keeping in mind that while failures like these become very public and it seems like cryptocurrencies are always doing nothing but crashing, failing, and losing money, there are also plenty of people making millions and even billions of dollars a year offering crypto related services. To those folks 300 million dollars, while not trivial by any means is also not the end of the world if it will allow them to continue operating.
  - vmception 5y ago
    Also noteworthy is that bridge technology is what allows these chains to have immediate utility to the market faster. Centralized Exchanges are extremely slow in listing new blockchains, especially meta assets on those blockchains. For example, want USDC on Solana? Sorry even if your exchange listed Solana and allow for withdrawal of native SOL, they aren't allowing withdrawals of tokens to the Solana network. They dont know, don't care, don't have the development resources to prioritize that, aren't even familiar with a erc-20 standard of tokens yet, and legal hasn't gotten the rubber stamp from the New York Department of Financial Services anyway so why bother catering to the rest of the world.. Whereas the permissionless bridges plug in immediately and billions of dollars of assets can move in without bothering with a centralized exchange. Building starts immediately, forget about the permits. So, private participants fixing a crucial bridge is the rational move.
    - wmf 5y ago
      I was wondering how a bridge could hope to earn back $300M in fees in any reasonable horizon, but if we view Wormhole as a loss leader to pump the overall Solana ecosystem (which I guess Jump is invested in) it makes sense.
    - dboreham 5y ago
      Also noteworthy: this kind of "trusted" bridge architecture is probably now doomed.
      - vmception 5y ago
        I don't get that impression. It's patched and more resilient now, the exploit occurred with someone watching the github about the patch, or even more likely it was someone on the dev team/discussion about why the patch was needed. The "guardians" are still there and distributed. I don't see more distributed bridge styles being real competitors at least to Wormhole on the Solana network. Individual users didn't lose funds and their exposure is always limited to a few minutes.
  - oblio 5y ago
    Didn't they do the unthinkable a few years back, for Ethereum itself? They forked the immutable database because of a bug or exploit, I forget what it was exactly. Similar story, rich people protecting their assets.
    - rvz 5y ago
      The failure of the first DAO for Ethereum in 2016 is what you are talking about. [0] Its a similar story, but this time no individual at the top reversing the whole blockchain of that transaction and hard forking it to cause a revoult against the main blockchain or a new group creating something like Solana Classic, etc. whilst talking about 'code is law'. At least this is indeed 'Code is law'. [0] https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)
    - roland35 5y ago
      Yup, it was called "the dao" and a hacker ran away with a third of their Ethereum. https://en.m.wikipedia.org/wiki/The_DAO_(organization) https://en.m.wikipedia.org/wiki/The_DAO_(organization)
- WJW 5y ago
  It's not the original funds that were restored; one of the hedge funds behind Wormhole put in an extra $320 million to balance the books again. The hackers still have the original $320 million.
- ww520 5y ago
  Guessing from the available information, Wormhole works by having a pile of ETH in its account, a piles of wETH tokens backed 1-to-1 by the ETH in the account, and piles of other types of tokens, like Solana. When the wETH coins are initially set up, there's a way to deposit the initial ETH tokens into the Wormhole's ETH account to jump start the whole process. When a user wants to convert Solana to ETH, he deposits the Solana tokens to the Wormhole smart contract and it issues the wETH tokens at some exchange rate, taking a 1-1 ETH from Wormhole's ETH account, tying the Solana and the ETH in the wETH tokens. After the dust is settled, the user can convert the wETH tokens to ETH. The Solana tokens held in the wETH tokens are deposited in Wormhole's Solana account, the ETH tokens held in the wETH tokens are released to the user. Everything is good. The hack was to create a bunch of Solana based wETH tokens out of the thin air, exploiting a bug in teh Wormhole smart contract. The hackers forced a settling of the fake wETH tokens against Wormhole's ETH account, taking the ETH away. In the process, leaving whole bunch garbage Solana tokens in Wormhole's Solana account. Now Wormhole's ETH account is down by $320M. Whatever wETH tokens floating out there have no 1-1 backing from the ETH account. The whole thing can collapse with a bank run. They fixed it by depositing $320M ETH tokens into the Wormhole's ETH account to ensure the fake wETH tokens are backed as well. The fake Solana tokens are still in their account. It's basically they're using $320M ETH tokens to buy a bunch of Solana tokens, which the hackers created. So at the end, they're not really out of $320M money; they still have the $320M Solana tokens, fake or not. It's just the general public got screwed by having $320M of Solana tokens inflated on them.
newbie789 5y ago
bhaak 5y ago
Somebody has deep pockets to fix such a blunder. Where is this money coming from? Who had enough ETH lying around to refill the bridge? They certainly didn't just buy it on the open market, that would have moved the SOLETH ratio.
- tylersmith 5y ago
  Wormhole is owned by a trading firm, Jump, who is providing the eth to restore the bridge liquidity.
  - beaned 5y ago
    Jump itself just had $320M laying around?
    - kccqzy 5y ago
      That's quite possible, judging by the huge bonuses a few friends working there got as a SWE.
    - e4e78a06 5y ago
      Jane Street made $8bn in 2020 [1]. $320M is probably peanuts in exchange for maintaining the stability of a market they dominate in capturing arbitrage money on. [1]: https://www.bloomberg.com/news/articles/2021-06-18/jane-street-and-drw-traders-made-billions-in-pandemic-markets https://www.bloomberg.com/news/articles/2021-06-18/jane-stre...
    - idohft 5y ago
      Jump is very profitable.
    - nexuist 5y ago
      Jump Trading Group isn't some rando crypto org, it's a legit hedge fund established in 1999. Supposedly it has at minimum $150M AUM[1] but because it's a private company nobody actually knows the real amount. We can predict that they probably have a few billion in cash lying around if they've been successfully trading for over 20 years. Jump Crypto, the group that bailed out Wormhole, is their crypto trading division. [1] https://wallmine.com/fund/3mg/jump-trading-llc https://wallmine.com/fund/3mg/jump-trading-llc
deleted 5y ago
[deleted]
bigdaddyrabbit2 5y ago
This is interesting. The hacker did not return the ETH, so the $320M has come from the deep-pocketed investors and VCs behind Solana/Wormhole. Interesting to note that the VCs are bailing out the retail users here, instead of the usual flow where taxpayers are on the hook for bailing out too-big-to-fail WallStreet banks.
- octoberfranklin 5y ago
  > so the $320M has come from the deep-pocketed investors and VCs If that had really happened there would be a txid, and people would be parading around an etherscan link. At the moment, this is no different from "funds are SAFU"
- steelstraw 5y ago
  An underappreciated improvement.
- slg 5y ago
  They aren't doing this because it is the morally right thing to do. They are doing it because they feel that the $320m is important to secure the value of their business, the Solana ecosystem (thanks for the correction arberx), and crypto in general. My personal interpretation of that, there are a lot of awfully rich people who are scared of the bubble popping.
  - arberx 5y ago
    Solana ecosystem* Exploit happened on Solana. Jump Trading has a vested interest in the Solana ecosystem and is effectively the sole market maker on it.
    - lima 5y ago
      There's a number of market markers besides Jump, like Alameda Research.
      - benreesman 5y ago
dang 5y ago
Previous related thread: In second largest DeFi hack, Blockchain Bridge loses $320M Ether - https://news.ycombinator.com/item?id=30186894 https://news.ycombinator.com/item?id=30186894 - Feb 2022 (561 comments)
steelstraw 5y ago
Vitalik warned about cross-chain bridge risk just a few weeks ago: 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". Note that cross-rollup apps within one zone of sovereignty are still fine. Not also that this also is a limit to the "modular blockchains" vision: you can't just pick and choose a separate data layer and security layer. Your data layer must be your security layer. https://twitter.com/vitalikbuterin/status/1479501366192132099 https://twitter.com/vitalikbuterin/status/147950136619213209...
- X6S1x6Okd1st 5y ago
  To be fair the situation he was talking about was that bridges are vulnerable to reorgs/51% attacks on either side and if that happens the bridged asset might lose it's peg, while the local/native asset won't.
- okwubodu 5y ago
  This isn’t the quite the scenario he was talking about. The Wormhole exploit is just a bug that could’ve occurred even if the bridge didn’t cross chains. Despite being large, it was still an isolated incedent compared to the multi-chain heist one could pull off with a 51% attack on a single chain.
  - woah 5y ago
    It's also a pretty dumb article which is very surprising coming from Vitalik. 51% attacks of the sort he describes are (remotely) possible whenever a blockchain interacts with any sort of system, not just another blockchain. In his example, someone uses a bridge to create wrapped Eth on another chain, and then 51% attacks Ethereum, returning the Eth they used to themselves, while keeping the wrapped Eth on the other chain. It's just as easy to have a scenario where someone sends Eth to an exchange, sells it, and then does the same thing.
wonderwonder 5y ago
Could this hack have allowed for the printing of eth on solana that did not actually exist on the eth blockchain or was it limited to real eth that had been bridged to solana?
- wmf 5y ago
  You probably could have printed infinite fake ETH on Solana, but soon enough someone would have noticed that the amount in circulation exceeded what was stored in the bridge which should be impossible.
  - okwubodu 5y ago
    They did use some of the fake weETH to trade for 430k SOL, valued at a little under $40 million. https://explorer.solana.com/address/CxegPrfn2ge5dNiQberUrQJkHCcimeR4VXkeawcFBBka https://explorer.solana.com/address/CxegPrfn2ge5dNiQberUrQJk...
- thebean11 5y ago
  They can print unlimited Solana wETH, but it’s worthless if it cannot be exchanged for Ethereum ETH. In this case the Ethereum contract would not have had the funds to redeem all of the IOUs (wETH) in existence on Solana.
agd 5y ago
Another question to ask - who lost most of the ETH in the first place? Could some of this be VCs paying themselves back and shoring up their investment in Solana at the same time?
danielvf 5y ago
Wormhole is now owned by the crypto arm of a large traditional financial trading company, Jump Trading. Here's a tweet from the CEO of Jump Crypto saying that they put up the funds: "Jump put up 120k of it’s own ETH because we believe in Wormhole and want to support it in this stage of its development." https://twitter.com/KariyaKanav/status/1489312871456649228 https://twitter.com/KariyaKanav/status/1489312871456649228 I think Jump Crypto also also heavily trading across the bridge, which means that some portion of the lost funds were their own funds.
- tylersmith 5y ago
  Wormhole has always been owned by Jump.
  - cldellow 5y ago
    I don't think that's true. Disclaimer: I know nothing about this space. But: - Oct 2020: Certus One is proud to announce the Wormhole project [1] - August 2021: Jump Trading acquires Certus One [2] [1]: https://medium.com/certus-one/introducing-the-wormhole-bridge-24911b7335f7 https://medium.com/certus-one/introducing-the-wormhole-bridg... [2]: https://www.bloomberg.com/news/articles/2021-08-03/quant-shop-jump-capital-buys-blockchain-engineer-firm-certus-one https://www.bloomberg.com/news/articles/2021-08-03/quant-sho...
- benreesman 5y ago
  I know relatively little about Jump Crypto BU per se. But I know people who work at Jump and they are serious as a heart attack. I think we can all sleep easy that the terrifyingly smart rich people made the right call on how to handle their own exposure. If retail people got jacked that’s another matter, but that’s not how I’m reading this? Did I miss something?
  - gaogao 5y ago
    I got a pretty extensive walkthrough of Jump's risk management stack and wasn't particularly impressed as a counterpoint. Side note: it's interesting that Jane Street is pretty anti-crypto and sort of indirectly results FTX from Sam and co. jumping ship.
abalaji 5y ago
For those interested, here's a great thread explaining how the hack happened: https://twitter.com/kelvinfichter/status/1489041221947375616 https://twitter.com/kelvinfichter/status/1489041221947375616
Youden 5y ago
IIUC, the hackers minted new coins, they didn't transfer ownership of anything from its legitimate owner to themselves. So I'm curious to hear: do people consider this "stealing"? The article uses the word often and even goes as far as "unlawful" but would this have broken any laws? Even CFAA seems out since no computer was accessed without authorisation.
- danielvf 5y ago
  As a part of the hack the attacker did transfer 320M million worth of previously existing coins to themselves. That was the payoff for the hack, and the entire point of doing the hack. The minting part was just a stepping stone to that. Also, the attacker definitely exceeded authorization - it was literally the authorization component of the code that the attacker bypassed by substituting part of it with their own ringer code.
  - cwkoss 5y ago
    How is this different from a bitcoin miner minting coins, trading them for another coin, and withdrawing? If code is law, attacker was playing by the rules. I don't think this is clear-cut illegal. It looks illegal-ish, but I think a good lawyer could argue it isnt. Does Solana/Wormhole have ToS that (in the courts eyes) overrides the state of the blockchain? If they did, doesn't that kind of defeat the purpose of a decentralized blockchain?
    - TameAntelope 5y ago
      Code isn't law, is the point. No matter how many times people try to claim that, the legal system does not, to my understanding, actually work that way. It would depend entirely on what a judge and a jury think about how the law ends up getting applied, were this tried in US courts.
      - cwkoss 5y ago
        If code isn't law, could a crypto holder sue a crypto miner for inflating the market supply and reducing the value of their holdings? What is the legal distinction between mining (which is intent of the protocol) and this attack (presumably not the intent of wormhole)? Do blockchain services need to create ToS's which can legally supercede in the case of bugs in order for courts to punish attackers? Would blockchain users accept a service with such a delegation of state?
cwkoss 5y ago
One of the more interesting aspects of this incident is that it's possible that they attacker discovered the attack via reading the bugfix: https://twitter.com/kelvinfichter/status/1489050921938132996?s=20&t=WqWvqW6fY7byXgpzF9d9iQ https://twitter.com/kelvinfichter/status/1489050921938132996... I love FOSS, but attackers being able to exploit bugs they read in fixes before they are deployed is certainly a downside - especially when the project manages billions of dollars. What process can/should be implemented to address this attack vector?
- _3u10 5y ago
  More importantly, how much does it cost to find these clauses in the smart contracts before the contract is modified? With $320M pay days it's one of the best bounty programs I've ever heard of.
- Firmwarrior 5y ago
  Holey moley, that is insane. It's pretty wild that a good test engineer can either eat dirt at a big company or help himself to millions of internet dollars by robbing poorly-secured startups Your argument about security is as old as FOSS itself, and it usually comes down to whether security through obscurity is valuable or not. I wouldn't say I'm qualified to weigh in on it either way myself
  - cwkoss 5y ago
    My question is less about security by obscurity, and more "how does solana/wormhole move forward"? Would node administrators accept a non-OSS (or post-adoption open sourcing) patch, and run it on their nodes trusting the devs until adoption is wide enough to prevent exploitation? It seems like blockchains could be in a pickle where bugfixes will inherently get exploited if they aren't released obscurely, but their users wont tolerate obscurity.
    - wmf 5y ago
      Nobody except attackers looks at the code so you can release whatever, claim it's open source whether it is or not, and people will run it. As long as number go up. Also, this hack was on a smart contract not the node software so there's really no convincing needed; Wormhole probably could have updated the contract on chain then released the source seconds later and it wouldn't have been vulnerable. Their mistake was releasing source of the patch over 10 days before applying the patch on chain.
Grustaf 5y ago
Reminds me of the good old days when exchanges got hacked (or "hacked") every other day, with hundreds of millions stolen.
- mdoms 5y ago
  Good old days? https://web3isgoinggreat.com/ https://web3isgoinggreat.com/
  - Grustaf 5y ago
    Well ok, it seems the scandals were bigger and more spectacular back then, but maybe not. Thanks for the link, very entertaining!
aaroninsf 5y ago
"Restored" is not really the word. They got robbed. Their parent and VC stepped in to bandaid over the terrible terrible press by throwing money at the problem in a bid to rebuy trust. I've started asking people explicitly: how can anyone who has ever programmed professionally, entrust themselves to someone's program? The interesting lemma is, don't we do that all day? To which the obvious rejoinder is, yes, but when we do so, it is almost always in contexts in which litigation and consumer action and introduced a massive obligation of transparency, best practices, liability, insurance, and other regulatory oversight and burdens. Which still fails, e.g. when Boeing bug kill planeloads. The wild west of this "smart contract" world has almost none of that. Sadly the answer to the rhetorical "what are people thinking!?" is no mystery. Those that are, are mostly on the side of the grift.
300bps 5y ago
I can't imagine the target they have on their back right now. They'll have quite a decision on their hands if someone takes this second round of $320 million.
ww520 5y ago
I was replying to another comment and came to a realization. It deserves its own comment. Jump Trading fixed the problem by depositing $320M ETH tokens into the Wormhole's ETH account to ensure the falsely issued wETH tokens are backed. The fake Solana tokens released from the fake wETH were deposited back into Wormhole's Solana account. They are still in Wormhole's Solana account after the re-capitalization. It's basically they're using the $320M ETH tokens to buy a bunch of Solana tokens, created by the hackers. So at the end, they're not really out of $320M money; they still have the $320M Solana tokens, fake or not. It's just the general public got screwed by having $320M of Solana tokens inflated up on them.
- ffggvv 5y ago
  so can you use this as a loophole to print inordinate amounts of solana? confused how they inflated the supply
  - ww520 5y ago
    Sure. Ever wonder how Tether work? Ha.
    - SilasX 5y ago
      Or central banks, for that matter? They print new money, and use it to buy and hold financial assets (usually government bonds). New money was added to the system, other assets were taken out.
  - lxgr 5y ago
    They apparently just supplied the backing assets without receiving anything in exchange, presumably to preserve trust in the larger ecosystem/chain. Pretty interesting precedent!
- ddalex 5y ago
  Yea, if the public trades in Solana. But they are out of $320M in ETH which is way more used then Solana.
blunte 5y ago
"restored"... that's an interesting word here, and it suggests that money was manufactured to replace that which was drained (which itself was a kind of manufacturing). The previous HN tweet thread story about this described so many dependent moving parts that I imagine great difficulty in properly testing and proving that the entire system worked correctly in all cases. If it is built as described in that story, auditing would be an enormous task... and further, putting your name on that audit would be very risky to your reputation (since almost inevitably you will miss something and it will be exploited). In summary, the system was too complex and offered too many ways for something to go wrong or be exploited.
- not2b 5y ago
  The stolen cryptocurrency was not recovered. The company put in its own real (fiat if you prefer) money to cover the losses. They did this because if they don't, the operation will collapse; no one will invest if bad security means all the money disappears.
almalkemqq 5y ago
guys, if you have crypto assets, move them qredonetowrk they are decentralized custody. they will save you fees from ETH. remember, if you don't own your keys, it's not your assets this is why I advise you to use qredonetwork :)
T3RMINATED 5y ago
paulpauper 5y ago
sounds suspicious how the hack occurred an hour after update, and all the funds restored as if nothing happened. Inside job or someone was tipped off? Tell your friend that there will be an update, the time, and have him exploit it on your behalf. I wonder how many of these hacks, exploits are inside jobs. Probably a lot.
syspec 5y ago
> How was Wormhole exploited? > Notably, the hacker carried out an unlawful mint of 120,000 wETH, which was valued at around $322 million at the time. They carried out the assault by taking advantage of a Solana VAA weakness, a bridge function that verifies asset transfers. Could anyone provide specific details as to what occurred, and how the weakness was actually exploited?
- ypeterholmes 5y ago
  Detailed breakdown here: https://twitter.com/kelvinfichter/status/1489041221947375616 https://twitter.com/kelvinfichter/status/1489041221947375616
  - syspec 5y ago
    That's an excellent write up! Thanks a bunch
ricardobeat 5y ago
> the whole network is down for maintenance "decentralized finance" Bitcoin's network cannot be stopped by anyone. How does Solana achieve that? What does "decentralized" even mean when everything depends on individual operators?
- mr_spothawk 5y ago
  tfw "maintenance" is actually just "still in development"
- Tenoke 5y ago
  If you had quoted the whole sentence you would've seen it's Wormhole that's down for maintenance and not Solana. Bridges aren't fully on-chain by definition and even if they were just a smart contract you can definitely have a pause clause in your code.
  - drexlspivey 5y ago
    Solana has been down a lot too https://status.solana.com/ https://status.solana.com/
    - netheril96 5y ago
      True, but unrelated to this I believe.
hypertele-Xii 5y ago
Looks like your money got sucked into a crypto wormhole. Teleported, elsewhere, through mathematimal impossibilities no-one with a computer can prove; and if they do, all the value put in disappears into the void.
nhoughto 5y ago
Restored is an interesting choice of word, Jump replaced the ETH at their cost is my read? It’s not like they wound back the transaction or got the ETH back. They would want to be confident there are no more bugs, only a few days ago this happened, did they do a full audit of things before tipping it in? Imagine if they lost another 320m !
NelsonMinar 5y ago
Bloomberg's story on this includes the paragraph "Wormhole developers offered the hacker a $10 million bug bounty for exploit details and the return of the funds." It does not explicitly say the hacker took that bounty or refunded the stolen money. Any guesses? https://www.bloomberg.com/news/articles/2022-02-02/blockchain-bridge-wormhole-hit-with-potential-315-million-hack?sref=1kJVNqnU https://www.bloomberg.com/news/articles/2022-02-02/blockchai...
nps1 5y ago
I thought the whole point of Bitcoin and similar cyber coins is a decentralized system. But it appears it is not the case. Still the infra is controlled by certain large private corps. Some of them known to Public and some are not. What if this controlling entity which has access to the code commits purposefully did "exploit commit" and take the money out of the system or what not. All it took is couple of approvals to a pull request. This is centralized system to the core.
- SkyMarshal 5y ago
  > I thought the whole point of Bitcoin and similar cyber coins is a decentralized system. But it appears it is not the case. It's the case in Bitcoin, but not as much in Ethereum and other ecosystems. The latter have a track record of compromising on that principle to bail out thefts enabled by shoddy engineering practices (this, The DAO, etc).
- vbuterin 5y ago
  In this case it's the bridge that's fairly centralized. There wasn't any hard forks or other manipulation of the underlying blockchains (except for sending transactions on them).
  - tcgv 5y ago
    Exactly. Vitalik Buterin even shared his concerns on the fundamental security limits of cross-chain bridges earlier this year: > For example, suppose that you have 100 ETH on Ethereum, and Ethereum gets 51% attacked, so some transactions get censored and/or reverted. No matter what happens, you still have your 100 ETH. Even a 51% attacker cannot propose a block that takes away your ETH, because such a block would violate the protocol rules and so it would get rejected by the network > Now, imaging what happens if you move 100 ETH onto a bridge on Solana to get 100 Solana-WETH, and then Ethereum gets 51% attacked. The attacker deposited a bunch of their own ETH into Solana-WETH and then reverted that transaction on the Ethereum side as soon as the Solana side confirmed it. The Solana-WETH contract is now no longer fully backed, and perhaps your 100 Solana-WETH is now only worth 60 ETH. Even if there's a perfect ZK-SNARK-based bridge that fully validates consensus, it's still vulnerable to theft through 51% attacks like this. [1] https://twitter.com/vitalikbuterin/status/1479501366192132099 https://twitter.com/vitalikbuterin/status/147950136619213209...

192 points by ushakov 5y ago

baby 5y ago

Behind every project, there are people. https://twitter.com/KariyaKanav/status/1489351031125426180 https://twitter.com/KariyaKanav/status/1489351031125426180 gg to the people who worked on fixing this.

cheeze 5y ago

How does that work? If the money was moved to ETH, how did they restore the funds?

Kranar 5y ago
My speculation on this is that such a failure is catastrophic enough to destroy an entire blockchain. Solana has made billionaires out of a small group of people and they'd much rather fork over the 300 million dollars to plug this hole so as to preserve the remainder of their wealth, instead of having Solana crash to become worthless. While in principle a bug like this could have happened on Ethereum, or any programmable blockchain platform, ultimately this attack happened on the Solana blockchain and is an attack on Solana. The people who have a vested interest in seeing Solana survive will have coughed up the funds. Finally, it's worth keeping in mind that while failures like these become very public and it seems like cryptocurrencies are always doing nothing but crashing, failing, and losing money, there are also plenty of people making millions and even billions of dollars a year offering crypto related services. To those folks 300 million dollars, while not trivial by any means is also not the end of the world if it will allow them to continue operating.
- vmception 5y ago
  Also noteworthy is that bridge technology is what allows these chains to have immediate utility to the market faster. Centralized Exchanges are extremely slow in listing new blockchains, especially meta assets on those blockchains. For example, want USDC on Solana? Sorry even if your exchange listed Solana and allow for withdrawal of native SOL, they aren't allowing withdrawals of tokens to the Solana network. They dont know, don't care, don't have the development resources to prioritize that, aren't even familiar with a erc-20 standard of tokens yet, and legal hasn't gotten the rubber stamp from the New York Department of Financial Services anyway so why bother catering to the rest of the world.. Whereas the permissionless bridges plug in immediately and billions of dollars of assets can move in without bothering with a centralized exchange. Building starts immediately, forget about the permits. So, private participants fixing a crucial bridge is the rational move.
  - wmf 5y ago
    I was wondering how a bridge could hope to earn back $300M in fees in any reasonable horizon, but if we view Wormhole as a loss leader to pump the overall Solana ecosystem (which I guess Jump is invested in) it makes sense.
  - dboreham 5y ago
    Also noteworthy: this kind of "trusted" bridge architecture is probably now doomed.
    - vmception 5y ago
      I don't get that impression. It's patched and more resilient now, the exploit occurred with someone watching the github about the patch, or even more likely it was someone on the dev team/discussion about why the patch was needed. The "guardians" are still there and distributed. I don't see more distributed bridge styles being real competitors at least to Wormhole on the Solana network. Individual users didn't lose funds and their exposure is always limited to a few minutes.
- oblio 5y ago
  Didn't they do the unthinkable a few years back, for Ethereum itself? They forked the immutable database because of a bug or exploit, I forget what it was exactly. Similar story, rich people protecting their assets.
  - rvz 5y ago
    The failure of the first DAO for Ethereum in 2016 is what you are talking about. [0] Its a similar story, but this time no individual at the top reversing the whole blockchain of that transaction and hard forking it to cause a revoult against the main blockchain or a new group creating something like Solana Classic, etc. whilst talking about 'code is law'. At least this is indeed 'Code is law'. [0] https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)
  - roland35 5y ago
    Yup, it was called "the dao" and a hacker ran away with a third of their Ethereum. https://en.m.wikipedia.org/wiki/The_DAO_(organization) https://en.m.wikipedia.org/wiki/The_DAO_(organization)
WJW 5y ago
It's not the original funds that were restored; one of the hedge funds behind Wormhole put in an extra $320 million to balance the books again. The hackers still have the original $320 million.
ww520 5y ago
Guessing from the available information, Wormhole works by having a pile of ETH in its account, a piles of wETH tokens backed 1-to-1 by the ETH in the account, and piles of other types of tokens, like Solana. When the wETH coins are initially set up, there's a way to deposit the initial ETH tokens into the Wormhole's ETH account to jump start the whole process. When a user wants to convert Solana to ETH, he deposits the Solana tokens to the Wormhole smart contract and it issues the wETH tokens at some exchange rate, taking a 1-1 ETH from Wormhole's ETH account, tying the Solana and the ETH in the wETH tokens. After the dust is settled, the user can convert the wETH tokens to ETH. The Solana tokens held in the wETH tokens are deposited in Wormhole's Solana account, the ETH tokens held in the wETH tokens are released to the user. Everything is good. The hack was to create a bunch of Solana based wETH tokens out of the thin air, exploiting a bug in teh Wormhole smart contract. The hackers forced a settling of the fake wETH tokens against Wormhole's ETH account, taking the ETH away. In the process, leaving whole bunch garbage Solana tokens in Wormhole's Solana account. Now Wormhole's ETH account is down by $320M. Whatever wETH tokens floating out there have no 1-1 backing from the ETH account. The whole thing can collapse with a bank run. They fixed it by depositing $320M ETH tokens into the Wormhole's ETH account to ensure the fake wETH tokens are backed as well. The fake Solana tokens are still in their account. It's basically they're using $320M ETH tokens to buy a bunch of Solana tokens, which the hackers created. So at the end, they're not really out of $320M money; they still have the $320M Solana tokens, fake or not. It's just the general public got screwed by having $320M of Solana tokens inflated on them.

newbie789 5y ago

bhaak 5y ago

Somebody has deep pockets to fix such a blunder. Where is this money coming from? Who had enough ETH lying around to refill the bridge? They certainly didn't just buy it on the open market, that would have moved the SOLETH ratio.

tylersmith 5y ago
Wormhole is owned by a trading firm, Jump, who is providing the eth to restore the bridge liquidity.
- beaned 5y ago
  Jump itself just had $320M laying around?
  - kccqzy 5y ago
    That's quite possible, judging by the huge bonuses a few friends working there got as a SWE.
  - e4e78a06 5y ago
    Jane Street made $8bn in 2020 [1]. $320M is probably peanuts in exchange for maintaining the stability of a market they dominate in capturing arbitrage money on. [1]: https://www.bloomberg.com/news/articles/2021-06-18/jane-street-and-drw-traders-made-billions-in-pandemic-markets https://www.bloomberg.com/news/articles/2021-06-18/jane-stre...
  - idohft 5y ago
    Jump is very profitable.
  - nexuist 5y ago
    Jump Trading Group isn't some rando crypto org, it's a legit hedge fund established in 1999. Supposedly it has at minimum $150M AUM[1] but because it's a private company nobody actually knows the real amount. We can predict that they probably have a few billion in cash lying around if they've been successfully trading for over 20 years. Jump Crypto, the group that bailed out Wormhole, is their crypto trading division. [1] https://wallmine.com/fund/3mg/jump-trading-llc https://wallmine.com/fund/3mg/jump-trading-llc

deleted 5y ago

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bigdaddyrabbit2 5y ago

This is interesting. The hacker did not return the ETH, so the $320M has come from the deep-pocketed investors and VCs behind Solana/Wormhole. Interesting to note that the VCs are bailing out the retail users here, instead of the usual flow where taxpayers are on the hook for bailing out too-big-to-fail WallStreet banks.

octoberfranklin 5y ago
> so the $320M has come from the deep-pocketed investors and VCs If that had really happened there would be a txid, and people would be parading around an etherscan link. At the moment, this is no different from "funds are SAFU"
steelstraw 5y ago
An underappreciated improvement.
slg 5y ago
They aren't doing this because it is the morally right thing to do. They are doing it because they feel that the $320m is important to secure the value of their business, the Solana ecosystem (thanks for the correction arberx), and crypto in general. My personal interpretation of that, there are a lot of awfully rich people who are scared of the bubble popping.
- arberx 5y ago
  Solana ecosystem* Exploit happened on Solana. Jump Trading has a vested interest in the Solana ecosystem and is effectively the sole market maker on it.
  - lima 5y ago
    There's a number of market markers besides Jump, like Alameda Research.
    - benreesman 5y ago

dang 5y ago

Previous related thread: In second largest DeFi hack, Blockchain Bridge loses $320M Ether - https://news.ycombinator.com/item?id=30186894 https://news.ycombinator.com/item?id=30186894 - Feb 2022 (561 comments)

steelstraw 5y ago

Vitalik warned about cross-chain bridge risk just a few weeks ago: 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". Note that cross-rollup apps within one zone of sovereignty are still fine. Not also that this also is a limit to the "modular blockchains" vision: you can't just pick and choose a separate data layer and security layer. Your data layer must be your security layer. https://twitter.com/vitalikbuterin/status/1479501366192132099 https://twitter.com/vitalikbuterin/status/147950136619213209...

X6S1x6Okd1st 5y ago
To be fair the situation he was talking about was that bridges are vulnerable to reorgs/51% attacks on either side and if that happens the bridged asset might lose it's peg, while the local/native asset won't.
okwubodu 5y ago
This isn’t the quite the scenario he was talking about. The Wormhole exploit is just a bug that could’ve occurred even if the bridge didn’t cross chains. Despite being large, it was still an isolated incedent compared to the multi-chain heist one could pull off with a 51% attack on a single chain.
- woah 5y ago
  It's also a pretty dumb article which is very surprising coming from Vitalik. 51% attacks of the sort he describes are (remotely) possible whenever a blockchain interacts with any sort of system, not just another blockchain. In his example, someone uses a bridge to create wrapped Eth on another chain, and then 51% attacks Ethereum, returning the Eth they used to themselves, while keeping the wrapped Eth on the other chain. It's just as easy to have a scenario where someone sends Eth to an exchange, sells it, and then does the same thing.

wonderwonder 5y ago

Could this hack have allowed for the printing of eth on solana that did not actually exist on the eth blockchain or was it limited to real eth that had been bridged to solana?

wmf 5y ago
You probably could have printed infinite fake ETH on Solana, but soon enough someone would have noticed that the amount in circulation exceeded what was stored in the bridge which should be impossible.
- okwubodu 5y ago
  They did use some of the fake weETH to trade for 430k SOL, valued at a little under $40 million. https://explorer.solana.com/address/CxegPrfn2ge5dNiQberUrQJkHCcimeR4VXkeawcFBBka https://explorer.solana.com/address/CxegPrfn2ge5dNiQberUrQJk...
thebean11 5y ago
They can print unlimited Solana wETH, but it’s worthless if it cannot be exchanged for Ethereum ETH. In this case the Ethereum contract would not have had the funds to redeem all of the IOUs (wETH) in existence on Solana.

agd 5y ago

Another question to ask - who lost most of the ETH in the first place? Could some of this be VCs paying themselves back and shoring up their investment in Solana at the same time?

danielvf 5y ago

Wormhole is now owned by the crypto arm of a large traditional financial trading company, Jump Trading. Here's a tweet from the CEO of Jump Crypto saying that they put up the funds: "Jump put up 120k of it’s own ETH because we believe in Wormhole and want to support it in this stage of its development." https://twitter.com/KariyaKanav/status/1489312871456649228 https://twitter.com/KariyaKanav/status/1489312871456649228 I think Jump Crypto also also heavily trading across the bridge, which means that some portion of the lost funds were their own funds.

tylersmith 5y ago
Wormhole has always been owned by Jump.
- cldellow 5y ago
  I don't think that's true. Disclaimer: I know nothing about this space. But: - Oct 2020: Certus One is proud to announce the Wormhole project [1] - August 2021: Jump Trading acquires Certus One [2] [1]: https://medium.com/certus-one/introducing-the-wormhole-bridge-24911b7335f7 https://medium.com/certus-one/introducing-the-wormhole-bridg... [2]: https://www.bloomberg.com/news/articles/2021-08-03/quant-shop-jump-capital-buys-blockchain-engineer-firm-certus-one https://www.bloomberg.com/news/articles/2021-08-03/quant-sho...
benreesman 5y ago
I know relatively little about Jump Crypto BU per se. But I know people who work at Jump and they are serious as a heart attack. I think we can all sleep easy that the terrifyingly smart rich people made the right call on how to handle their own exposure. If retail people got jacked that’s another matter, but that’s not how I’m reading this? Did I miss something?
- gaogao 5y ago
  I got a pretty extensive walkthrough of Jump's risk management stack and wasn't particularly impressed as a counterpoint. Side note: it's interesting that Jane Street is pretty anti-crypto and sort of indirectly results FTX from Sam and co. jumping ship.

abalaji 5y ago

For those interested, here's a great thread explaining how the hack happened: https://twitter.com/kelvinfichter/status/1489041221947375616 https://twitter.com/kelvinfichter/status/1489041221947375616

Youden 5y ago

IIUC, the hackers minted new coins, they didn't transfer ownership of anything from its legitimate owner to themselves. So I'm curious to hear: do people consider this "stealing"? The article uses the word often and even goes as far as "unlawful" but would this have broken any laws? Even CFAA seems out since no computer was accessed without authorisation.

danielvf 5y ago
As a part of the hack the attacker did transfer 320M million worth of previously existing coins to themselves. That was the payoff for the hack, and the entire point of doing the hack. The minting part was just a stepping stone to that. Also, the attacker definitely exceeded authorization - it was literally the authorization component of the code that the attacker bypassed by substituting part of it with their own ringer code.
- cwkoss 5y ago
  How is this different from a bitcoin miner minting coins, trading them for another coin, and withdrawing? If code is law, attacker was playing by the rules. I don't think this is clear-cut illegal. It looks illegal-ish, but I think a good lawyer could argue it isnt. Does Solana/Wormhole have ToS that (in the courts eyes) overrides the state of the blockchain? If they did, doesn't that kind of defeat the purpose of a decentralized blockchain?
  - TameAntelope 5y ago
    Code isn't law, is the point. No matter how many times people try to claim that, the legal system does not, to my understanding, actually work that way. It would depend entirely on what a judge and a jury think about how the law ends up getting applied, were this tried in US courts.
    - cwkoss 5y ago
      If code isn't law, could a crypto holder sue a crypto miner for inflating the market supply and reducing the value of their holdings? What is the legal distinction between mining (which is intent of the protocol) and this attack (presumably not the intent of wormhole)? Do blockchain services need to create ToS's which can legally supercede in the case of bugs in order for courts to punish attackers? Would blockchain users accept a service with such a delegation of state?

cwkoss 5y ago

One of the more interesting aspects of this incident is that it's possible that they attacker discovered the attack via reading the bugfix: https://twitter.com/kelvinfichter/status/1489050921938132996?s=20&t=WqWvqW6fY7byXgpzF9d9iQ https://twitter.com/kelvinfichter/status/1489050921938132996... I love FOSS, but attackers being able to exploit bugs they read in fixes before they are deployed is certainly a downside - especially when the project manages billions of dollars. What process can/should be implemented to address this attack vector?

_3u10 5y ago
More importantly, how much does it cost to find these clauses in the smart contracts before the contract is modified? With $320M pay days it's one of the best bounty programs I've ever heard of.
Firmwarrior 5y ago
Holey moley, that is insane. It's pretty wild that a good test engineer can either eat dirt at a big company or help himself to millions of internet dollars by robbing poorly-secured startups Your argument about security is as old as FOSS itself, and it usually comes down to whether security through obscurity is valuable or not. I wouldn't say I'm qualified to weigh in on it either way myself
- cwkoss 5y ago
  My question is less about security by obscurity, and more "how does solana/wormhole move forward"? Would node administrators accept a non-OSS (or post-adoption open sourcing) patch, and run it on their nodes trusting the devs until adoption is wide enough to prevent exploitation? It seems like blockchains could be in a pickle where bugfixes will inherently get exploited if they aren't released obscurely, but their users wont tolerate obscurity.
  - wmf 5y ago
    Nobody except attackers looks at the code so you can release whatever, claim it's open source whether it is or not, and people will run it. As long as number go up. Also, this hack was on a smart contract not the node software so there's really no convincing needed; Wormhole probably could have updated the contract on chain then released the source seconds later and it wouldn't have been vulnerable. Their mistake was releasing source of the patch over 10 days before applying the patch on chain.

Grustaf 5y ago

Reminds me of the good old days when exchanges got hacked (or "hacked") every other day, with hundreds of millions stolen.

mdoms 5y ago
Good old days? https://web3isgoinggreat.com/ https://web3isgoinggreat.com/
- Grustaf 5y ago
  Well ok, it seems the scandals were bigger and more spectacular back then, but maybe not. Thanks for the link, very entertaining!

aaroninsf 5y ago

"Restored" is not really the word. They got robbed. Their parent and VC stepped in to bandaid over the terrible terrible press by throwing money at the problem in a bid to rebuy trust. I've started asking people explicitly: how can anyone who has ever programmed professionally, entrust themselves to someone's program? The interesting lemma is, don't we do that all day? To which the obvious rejoinder is, yes, but when we do so, it is almost always in contexts in which litigation and consumer action and introduced a massive obligation of transparency, best practices, liability, insurance, and other regulatory oversight and burdens. Which still fails, e.g. when Boeing bug kill planeloads. The wild west of this "smart contract" world has almost none of that. Sadly the answer to the rhetorical "what are people thinking!?" is no mystery. Those that are, are mostly on the side of the grift.

300bps 5y ago

I can't imagine the target they have on their back right now. They'll have quite a decision on their hands if someone takes this second round of $320 million.

ww520 5y ago

I was replying to another comment and came to a realization. It deserves its own comment. Jump Trading fixed the problem by depositing $320M ETH tokens into the Wormhole's ETH account to ensure the falsely issued wETH tokens are backed. The fake Solana tokens released from the fake wETH were deposited back into Wormhole's Solana account. They are still in Wormhole's Solana account after the re-capitalization. It's basically they're using the $320M ETH tokens to buy a bunch of Solana tokens, created by the hackers. So at the end, they're not really out of $320M money; they still have the $320M Solana tokens, fake or not. It's just the general public got screwed by having $320M of Solana tokens inflated up on them.

ffggvv 5y ago
so can you use this as a loophole to print inordinate amounts of solana? confused how they inflated the supply
- ww520 5y ago
  Sure. Ever wonder how Tether work? Ha.
  - SilasX 5y ago
    Or central banks, for that matter? They print new money, and use it to buy and hold financial assets (usually government bonds). New money was added to the system, other assets were taken out.
- lxgr 5y ago
  They apparently just supplied the backing assets without receiving anything in exchange, presumably to preserve trust in the larger ecosystem/chain. Pretty interesting precedent!
ddalex 5y ago
Yea, if the public trades in Solana. But they are out of $320M in ETH which is way more used then Solana.

blunte 5y ago

"restored"... that's an interesting word here, and it suggests that money was manufactured to replace that which was drained (which itself was a kind of manufacturing). The previous HN tweet thread story about this described so many dependent moving parts that I imagine great difficulty in properly testing and proving that the entire system worked correctly in all cases. If it is built as described in that story, auditing would be an enormous task... and further, putting your name on that audit would be very risky to your reputation (since almost inevitably you will miss something and it will be exploited). In summary, the system was too complex and offered too many ways for something to go wrong or be exploited.

not2b 5y ago
The stolen cryptocurrency was not recovered. The company put in its own real (fiat if you prefer) money to cover the losses. They did this because if they don't, the operation will collapse; no one will invest if bad security means all the money disappears.

almalkemqq 5y ago

guys, if you have crypto assets, move them qredonetowrk they are decentralized custody. they will save you fees from ETH. remember, if you don't own your keys, it's not your assets this is why I advise you to use qredonetwork :)

T3RMINATED 5y ago

paulpauper 5y ago

sounds suspicious how the hack occurred an hour after update, and all the funds restored as if nothing happened. Inside job or someone was tipped off? Tell your friend that there will be an update, the time, and have him exploit it on your behalf. I wonder how many of these hacks, exploits are inside jobs. Probably a lot.

syspec 5y ago

> How was Wormhole exploited? > Notably, the hacker carried out an unlawful mint of 120,000 wETH, which was valued at around $322 million at the time. They carried out the assault by taking advantage of a Solana VAA weakness, a bridge function that verifies asset transfers. Could anyone provide specific details as to what occurred, and how the weakness was actually exploited?

ypeterholmes 5y ago
Detailed breakdown here: https://twitter.com/kelvinfichter/status/1489041221947375616 https://twitter.com/kelvinfichter/status/1489041221947375616
- syspec 5y ago
  That's an excellent write up! Thanks a bunch

ricardobeat 5y ago

> the whole network is down for maintenance "decentralized finance" Bitcoin's network cannot be stopped by anyone. How does Solana achieve that? What does "decentralized" even mean when everything depends on individual operators?

mr_spothawk 5y ago
tfw "maintenance" is actually just "still in development"
Tenoke 5y ago
If you had quoted the whole sentence you would've seen it's Wormhole that's down for maintenance and not Solana. Bridges aren't fully on-chain by definition and even if they were just a smart contract you can definitely have a pause clause in your code.
- drexlspivey 5y ago
  Solana has been down a lot too https://status.solana.com/ https://status.solana.com/
  - netheril96 5y ago
    True, but unrelated to this I believe.

hypertele-Xii 5y ago

Looks like your money got sucked into a crypto wormhole. Teleported, elsewhere, through mathematimal impossibilities no-one with a computer can prove; and if they do, all the value put in disappears into the void.

nhoughto 5y ago

Restored is an interesting choice of word, Jump replaced the ETH at their cost is my read? It’s not like they wound back the transaction or got the ETH back. They would want to be confident there are no more bugs, only a few days ago this happened, did they do a full audit of things before tipping it in? Imagine if they lost another 320m !

NelsonMinar 5y ago

Bloomberg's story on this includes the paragraph "Wormhole developers offered the hacker a $10 million bug bounty for exploit details and the return of the funds." It does not explicitly say the hacker took that bounty or refunded the stolen money. Any guesses? https://www.bloomberg.com/news/articles/2022-02-02/blockchain-bridge-wormhole-hit-with-potential-315-million-hack?sref=1kJVNqnU https://www.bloomberg.com/news/articles/2022-02-02/blockchai...

nps1 5y ago

I thought the whole point of Bitcoin and similar cyber coins is a decentralized system. But it appears it is not the case. Still the infra is controlled by certain large private corps. Some of them known to Public and some are not. What if this controlling entity which has access to the code commits purposefully did "exploit commit" and take the money out of the system or what not. All it took is couple of approvals to a pull request. This is centralized system to the core.

SkyMarshal 5y ago
> I thought the whole point of Bitcoin and similar cyber coins is a decentralized system. But it appears it is not the case. It's the case in Bitcoin, but not as much in Ethereum and other ecosystems. The latter have a track record of compromising on that principle to bail out thefts enabled by shoddy engineering practices (this, The DAO, etc).
vbuterin 5y ago
In this case it's the bridge that's fairly centralized. There wasn't any hard forks or other manipulation of the underlying blockchains (except for sending transactions on them).
- tcgv 5y ago
  Exactly. Vitalik Buterin even shared his concerns on the fundamental security limits of cross-chain bridges earlier this year: > For example, suppose that you have 100 ETH on Ethereum, and Ethereum gets 51% attacked, so some transactions get censored and/or reverted. No matter what happens, you still have your 100 ETH. Even a 51% attacker cannot propose a block that takes away your ETH, because such a block would violate the protocol rules and so it would get rejected by the network > Now, imaging what happens if you move 100 ETH onto a bridge on Solana to get 100 Solana-WETH, and then Ethereum gets 51% attacked. The attacker deposited a bunch of their own ETH into Solana-WETH and then reverted that transaction on the Ethereum side as soon as the Solana side confirmed it. The Solana-WETH contract is now no longer fully backed, and perhaps your 100 Solana-WETH is now only worth 60 ETH. Even if there's a perfect ZK-SNARK-based bridge that fully validates consensus, it's still vulnerable to theft through 51% attacks like this. [1] https://twitter.com/vitalikbuterin/status/1479501366192132099 https://twitter.com/vitalikbuterin/status/147950136619213209...