How the Bitcoin network can solve the pitfalls of DeFi token bridges
As DeFi bleeds billions of dollars annually due to token bridge attacks, a new layer-2 solution seeks a solution from within the Bitcoin blockchain. Decentralized finance (DeFi) saw a record inflow from centralized exchanges as crypto users flocked to self-custody solutions following the FTX collapse. Over 100,000 Bitcoin (BTC) left crypto exchanges so investors could avoid third-party custody. True to the “not your keys, not your coins” mantra of Bitcoin, DeFi solves a wide array of problems associated with centralized entities. However, several reports indicate DeFi is not a fail-safe environment, as high-profile protocol exploits like Wormhole, Nomad and Ronin made headlines in 2022 for the wrong reasons. Source: Token Terminal DeFi exploiters particularly target cross-chain bridges. In fact, cross-chain bridge exploits account for more than half of all DeFi exploits since September 2020, with approximately $2.5 billion lost to these attacks. A Chainalysis report shows that token b...