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Sidechain and cross-chain security issues
Blockchain technology concept.
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Sidechains and cross-chains are great engineering solutions to scale and expand the functionality of blockchains. They open up new opportunities for interaction between different networks. However, they also bring new security risks. As their popularity grows, sidechains and cross-chains are attracting more and more attention from attackers, making issues of data integrity, confidentiality, and availability increasingly relevant.
· Side chains
Sidechain is a technology that allows you to create additional data chains connected to the main blockchain network. The idea is to improve certain features or functionality of the blockchain by moving some of the operations from the base blockchain. Users can move their assets between the main blockchain and the sidechain. This allows you to improve scalability, speed up transactions, or add new features without requiring changes to the main blockchain.
For example, a sidechain of the Ethereum network called PoS polygon It performs nearly 500 times faster than the parent network.
· Crossed chains
Unlike sidechains, which usually operate as additional data chains within the same blockchain system, cross-chains involve the interaction between different blockchains, often even those belonging to completely different protocols and projects. The idea of cross-chains is to allow the movement of assets and data between different blockchains, enabling interoperability between networks.
First Blockchain Challenges and Solutions
To the the beginning of the blockchain era, when Bitcoin, the first and most famous blockchain network, appeared, performance limitations began to emerge. Blocks on the chain were generated approximately every 10 minutes, and there were limits to the number of transactions that could be included in a single block.
With the growing popularity of cryptocurrencies and blockchain, it has become clear that solutions are needed to improve performance and scalability. Transaction confirmation delays and throughput limitations have become urgent issues that need to be addressed.
The concept of sidechains began to emerge as a way to solve scalability problems. The idea was to move some transactions or operations off the main blockchain to improve performance without altering the main chain itself.
Over time, as blockchain technologies have developed, researchers and developers have begun to propose specific solutions and protocols for implementing sidechains.
Various projects have started experimenting with sidechains, testing them in real-life conditions. This has allowed the community to better understand the advantages and limitations of this approach.
It is important to understand that each sidechain has its own security measures. If a sidechain is compromised, the damage is contained within that chain and has no impact on the main blockchain. However, if the main blockchain is compromised, the sidechain can still function, but its connection to the parent chain will be rendered useless.
Comparison of side chains and cross chains
Both concepts aim to improve the scalability of the blockchain. They provide mechanisms to process more transactions and improve system performance.
Sidechain and cross-chain offload redundant operations from the main chain, making resource use more efficient. By leveraging sidechains and cross-chains, developers can improve their applications (dApp) with new features and functionality.
Smart contracts are the building blocks for creating complex and secure transactions within a single blockchain. Their automated and programmable nature greatly improves the functionality and efficiency of sidechains and cross-chains.
However, smart contracts currently operate primarily within a single blockchain network and cannot directly access or interact with data or code on another blockchain due to technical limitations and security concerns.
Dedy Lase, Global President of CryptoSafe, leads a team of over 15,000 members and shares his journey on his YouTube and Telegram channel, focusing on blockchain and cryptocurrency awareness. She explains: “Cross-chain smart contracts are decentralized applications composed of separate smart contracts on different blockchain networks that communicate to create a single unified application. These cross-chain smart contracts form a unified dApp with logic distributed across multiple blockchains.”
There are emerging technologies and concepts, known as interoperability solutions, that aim to enable communication and interaction between blockchains. These are bridges or gateways that allow some level of data or token transfer between blockchains. However, these solutions are still in development and have limitations.
Cross Chain Attacks
· Double expense
The Double-Spending attack aims to reuse the same assets on different blockchains. Double-Spending occurs when an attacker sends two or more transactions at the same time using the same cryptocurrency funds. A common example is a Race Attack, where the attacker sends two different transactions with the same funds at the same time. The attacker hopes that both transactions will be included in the blocks, which is more likely in blockchains with long block generation times.
Double spending remains a major challenge for blockchain systems, and researchers and developers are continually searching for effective methods to combat this threat. To prevent double-spending attacks, blockchain systems employ various protection measures and protocols. Transaction confirmation methods such as Proof-of-Work and Proof-of-Stake help reduce the likelihood of a successful attack. Additionally, many blockchains use consensus and authentication mechanisms to ensure transaction security.
· Return attacks
A return attack exploits a flaw in smart contracts where a function makes an external call to another contract before updating its state. This vulnerability allows the potentially malicious external contract to revert to its original function and repeatedly perform certain actions, such as withdrawals, using the same unchanged state.
Additionally, cross-chains are vulnerable to common DDoS attacks. To mitigate these risks and defend against such attacks, developers employ a variety of strategies, including advanced smart contracts and advanced cryptographic techniques. A crucial aspect of this process is conducting thorough testing and security audits when developing cross-chain bridges.
Multi-signature (Multisig) schemes are also used as a security measure. These cryptographic systems allow multiple users to jointly manage funds or execute transactions. Instead of relying on a single key or user, multisig requires signatures from multiple keys to authorize and execute specific actions.
Sidechain attacks
Side chains are particularly vulnerable to 51% attackespecially if their consensus algorithms are prone to this type of threat. An attacker who controls the majority of the network’s computing power can manipulate transactions, reject blocks, and alter the overall sequence of events on the sidechain.
Smart contracts on sidechains are vulnerable to recursive attacks, stack overflows, and other types of exploits. Protecting against these threats requires thorough auditing and testing of smart contracts, as well as the use of secure programming practices.
Conclusion
Sidechain and cross-chain technologies are widely used as gateways for exchanging funds and values between different segments of the cryptocurrency market. It is easy to understand why hackers of all kinds have targeted cross-chain bridges and related protocols. According to a Chain analysis reportThese technologies were responsible for the largest thefts of 2022, with total damages amounting to over $3 billion.
Major analytical platforms and their specialists are constantly on the lookout for stolen funds and scammers, working to block them on cryptocurrency exchanges and protocols. These platforms analyze large volumes of transaction data, group crypto wallet addresses, classify risks, and use data visualization to streamline the analysis process.
There is a strong demand among market participants for new Data Science approaches that involve in-depth research on various attributes. Furthermore, there is a shortage of analysts in the market. While enterprise solutions are available, there are also open source platforms supported by a community of experts for analyzing cross-blockchain transactions. Specialized tools have been developed for blockchain forensics between sidechains and cross-chains.
To improve the security of sidechains and cross-chain bridges, it is essential to increase transparency and standardization. This includes conducting audits to ensure compliance with industry standards and performing penetration tests. Additionally, implementing a secure software development lifecycle (SDLC) is necessary to improve the quality of smart contract development.
Currently, blockchains may seem like the domain of tech enthusiasts and their problems may seem niche. However, blockchain technology is rapidly expanding across various sectors of the economy, becoming an integral part of innovative business applications. As a result, the risks associated with blockchain technology are now relevant not only to cryptocurrency organizations, but also to traditional industries. Therefore, readiness to secure critical blockchain-based processes in the next three to five years must be established today.