The recent security exploit on the crypto protocol Nomad has resulted in a loss of almost $200 million, highlighting the importance of education and security protocols in protecting web3 communities from hackers.
"The crypto ecosystem is currently in a nascent stage of adoption," said Nick Percoco, Chief Security Officer at Kraken. "Despite the surge of interest over recent years, there is an educational divide that still needs to be bridged for crypto adoption to be truly successful."
Understanding the Nomad Hack
Nomad, a crypto bridging protocol that allows users to trade tokens between multiple blockchains, lost approximately $190.7 million in crypto in a hack on Monday. The protocol now has about $15,000 total value locked (TVL), according to data from decentralized finance tracking platform DefiLlama.
Like other cross-chain bridges, Nomad enables its users to transfer assets from one blockchain to another through wrapped tokens. Victor Young, founder and chief architect at interoperability network Analog, explained the concept of bridging: "The motivation for malicious actors in the crypto bridge space is substantial because a minor vulnerability can yield millions of dollars."
The Growing Threat of Hacks
"We will continue to see more hacks," said Young. "This is because the sheer number of blockchains on the market keeps growing, with more being created each day." The broader implication of this growth is that blockchain ecosystems have become ‘walled gardens’ of sorts.
However, there are a number of bug bounties in DeFi, which incentivize legal routes of exploiting vulnerabilities and should reduce the overall number of hacks across the ecosystem over time. "This means that if a white-hat hacker identifies an exploit, they can now receive massive payouts," said Percoco.
The Role of White-Hat Hackers
Cointelegraph reported that Nomad stated some of the people who took funds were white-hat hackers protecting funds from further losses. The exact amount they saved is unclear, but Nomad thanked them for their actions. This highlights the importance of collaboration between developers and security experts to prevent such incidents.
The Cost of Inadequate Security
"Ultimately, bridge developers and operators need to invest heavily in security," said Percoco. "Every upgrade and each configuration change that happens on-chain needs to be audited, preferably by multiple independent parties." This may come at a significant cost, but otherwise, incidents like this will continue to occur.
The Future of Web3 Security
To mitigate the risks associated with hacking, it is essential for web3 communities to prioritize education and security protocols. By doing so, we can create a more secure environment for users and developers alike.
"It’s not just about the money; it’s about building trust in the ecosystem," said Percoco. "We need to make sure that everyone understands the risks and takes steps to mitigate them."
Conclusion
The Nomad hack serves as a wake-up call for the web3 community, emphasizing the importance of education and security protocols. By investing in security measures and collaborating with experts, we can create a safer environment for users and developers.
As Percoco noted: "We need to make sure that everyone understands the risks and takes steps to mitigate them." The future of web3 security depends on our ability to learn from past mistakes and work together to build a more secure ecosystem.
