Solana is dubbed as an Ethereum killer. While there have been other coins too, Solana has remained a popular one and occupies a spot in the top 10 cryptocurrencies today. It promised the best of Ethereum but at a fraction of a cost. The downside for Ethereum is its (ETH) gas fee which is insane!
All that changed a week ago, when a hacker exploited a cross-chain bridge Wormhole and got away with over $320 million in wrapped Ethereum. Cross-chain bridges support the exchange of crypto on specific blockchain as tokens. For example, BTC on a Binance Chain (BEP-2) or Binance Smart Chain (BEP-20) is pegged against the original Bitcoin blockchain with a 1:1 ratio. On B(S)C, it’s WBTC. In order to use your BTC, you’d need BNB (Binance Coin) aka its native token in fee to send it to the platform/exchange.
This applies to TRON (TRC20), Ethereum (ERC20), Polygon (MATIC), and other blockchains.
Back to Wormhole hack where a forensic analysis by Paradigm researchers showed a flaw in Solana’s interface with Wormhole. The funds stolen led to a huge uproar (as expected), with criticisms on Solana’s security side. It’s a shame that such a big name as Solana fell prey to the hack.
To understand it like you’re 5 and how the hacker stole 98k ETH on Solana:
- To create wETH on their chain, Solana checks that there is a valid signature and that the signature comes from a Guardian.
- Proper usage means there is a valid signature aka ✔️ from a guardian (✔️). When the conditions match, the request’s approved.
- They expected hacker would issue an invalid signature aka ❌ from a guardian (✔️). When the two conditions don’t match, it would deny the hacker’s request.
- During the Wormhole attack, the hacker issued an invalid signature (❌) from a non-guardian (❌). But since the conditions matched, the Solana chain approved the request and the hacker stole the ETH from the network.
- The Ethereum network processed the withdrawal because Solana okayed Ethereum that it’s legit. When in actual, Solana had a flawed logic to determine the process.
This brings us to the “blockchain trilemma”, a term coined by Ethereum’s co-founder Vitalik Buterin.
Blockchain trilemma focuses on three aspects or issues of the technology:
Blockchain developers have long struggled to accommodate the three but often one’s left out to make room for the other two. And it’s widely believed that any decentralized network can at best provide two benefits at any given time:
- Decentralization and security
- Security and scalability
- Decentralization and scalability
However, innovations in technology have led to Layer-1 and Layer-2 solutions which seek to overcome the blockchain trilemma once and for all.
It’s expected to function in the following manner:
- Decentralization – the blockchain will not be managed by a single entity but its control should be distributed equally among the participants.
- Security – the blockchain must have a rock-solid defense mechanism to prevent malicious actors from taking over.
- Scalability – the blockchain must be able to handle a large chunk of transactions without fail at increased fee and transaction time.
The last point isn’t so user-friendly and is more of a compromise. Ethereum is already marred by high gas fees and longer transaction times. The Crypto market is witnessing a boom in adoption and is a lucrative opportunity for most. Anything else and people would have already called it quits.
Achieving all three is no easy feat and seems nearly impossible at this time. Regardless, ambition drives the world, and developers continue to believe and work toward blockchains that can indeed have all three aspects catered to.
Decentralization isn’t a myth and Bitcoin has already shown it. But other than BTC, not many blockchains can back up their claims to being truly decentralized. Most of Solana’s allotment is that of professional investors so you can assume, it’s where the money is. And naturally was a bulls-eye for malicious actors.
Solana has faced congestion on its blockchain in recent times as well as has become sluggish. Which is due to an overload of spam and bots. Keep your fingers crossed though, as what Solana is currently facing, not long ago, Ethereum was in the same boat.