NEW YORK (BLOOMBERG) – High-profile hacks on crypto “bridges” – which allow users to swap digital tokens across blockchains – are creating opportunities for exchanges and others to offer more secure alternatives.
Crypto exchanges FTX and Coinbase Global are deepening their capabilities to provide bridge-like services on various blockchains, so that users invested in Bitcoin or Ethereum can easily participate in other networks’ financial or gaming apps.
FTX, for instance, last year launched a marketplace allowing customers to trade Solana-based non-fungible tokens (NFTs), and to swap their Ethereum for the chain’s main Sol coin to buy them.
Users can also deposit an Ethereum-based NFT and withdraw it on Solana via FTX – instead of a bridge. And more app developers, like institutional lending marketplace Maple Finance, are moving onto new blockchains, making bridges unnecessary for certain transactions.
While some measures may have been in the works prior to the breaches, their urgency and attraction have increased after hackers siphoned more than US$1 billion (S$1.39 billion) out of crypto bridges like Wormhole and Ronin – most of it in February and March.
An April survey of 500 adults in the United States by OnePulse showed 80 per cent of respondents do not trust crypto networks to protect their funds.
While Ethereum-connected bridges still contain some US$17.4 billion in value locked, that is down about 17 per cent in the past 30 days, according to data from tracker Dune Analytics.
“It wouldn’t shock me if more users wanted exchanges as bridges given their expertise and bankroll,” said Mr Sam Bankman-Fried, chief executive officer of FTX, in an e-mail. “We’re currently bridging some chains together and are thinking about potentially doing more.”
With decentralised bridges, which are operated via software, it is often unclear who runs them, who can access their funds and how, and whether users will be reimbursed in case of a hack.
On the other end of the spectrum, a more centralised alternative may be run by a licensed and regulated firm that can be held accountable for any problems.
On March 17, Coinbase Wallet introduced support for Solana, letting users send, receive and store Solana and SPL tokens, which are coins native to the Solana blockchain. For example, if investors had previously wanted to move a USDC coin – one of the top stablecoins – from Ethereum to Solana, they needed to deposit the USDC in Coinbase to buy Sol, then swap that token for USDC-SPL on market maker Raydium.
Now, that can be done through Coinbase directly, according to Mr Austin Federa, head of communications at Solana Labs.
“The more exchanges do this, the easier it becomes to explore Solana’s offering without having to support a decentralised exchange or a bridge,” Mr Federa said.
In its blog, Coinbase said it plans to further integrate into the Solana ecosystem, letting users connect to its decentralised applications, or dapps, and manage their Solana NFTs directly within their Coinbase Wallet.
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