Missing Multichain CEO Is Causing Ripples Across the Industry

Please fol­low and like us:
Pin Share

The blockchain indus­try is start­ing to feel the reper­cus­sions of the miss­ing CEO of Mul­ti­chain, the largest blockchain bridge by assets, as ser­vice for at least 11 chains was inter­rupt­ed. Secu­ri­ty experts and founders say oth­er chains could come next.

Mul­ti­chain on Wednes­day said it sus­pend­ed ser­vices for Kekchain, Pub­licMint, Dyno Chain, Red Light Chain, Dex­it, Ekta, HPB, ONUS, Omax, Find­o­ra, and Planq chains as its CEO remains absent.

While avail­able data sug­gests top affect­ed blockchains Ekta, ONUS, Omax, Find­o­ra, Planq, and Mint account for just over $55.5 mil­lion in mar­ket cap­i­tal­iza­tion, Mul­ti­chain also ser­vices Ethereum and Binance Smart Chain. There are $1.45 bil­lion in assets held in Mul­ti­chain smart contracts.

Impacts All Chains

If the Mul­ti­chain bridge can’t process trans­ac­tions, it will have a neg­a­tive impact on all chains con­nect­ed to it, accord­ing to Reza Bashash, Co-Cre­ator & Tech­ni­cal Lead at Solo­genic and Coreum. He explained that the sit­u­a­tion is par­tic­u­lar­ly prob­lem­at­ic for chains where Mul­ti­chain acts as a cus­to­di­an on one chain and a wrapped token issuer on another. 

“Not only will the col­lat­er­al be lost, but also the val­ue of the wrapped tokens will become 0 as they can­not be con­vert­ed back to the under­ly­ing token.”

Missing CEO

Issues at Mul­ti­chain began late last month when its CEO went miss­ing, and yet uncon­firmed rumors spread of his arrest in China. 

In an indus­try built around the notion that blockchain net­works should fea­ture no sin­gle points of fail­ure, it is per­haps iron­ic that a decen­tral­ized ser­vice con­nect­ing those net­works, in fact, does.

Mul­ti­chain did not respond to a request for com­ment from The Defiant.

Lack of Redundancy

Sha­har Madar, head of secu­ri­ty prod­ucts at dig­i­tal asset cus­tody and set­tle­ment plat­form Fire­blocks, said that it boils down to how Mul­ti­chain imple­ment­ed its net­work and sys­tems in terms of two aspects: “One is the redun­dan­cy. And the sec­ond one is security.”

Despite being a decen­tral­ized pro­to­col, the lack of redun­dan­cy in the case of Multichain’s cen­tral­ized serv­er access ulti­mate­ly caused big rip­ples in liq­uid­i­ty down­stream. As Madar points out, “One guy does­n’t answer the phone for 24 hours, and sud­den­ly every­one fears for bil­lions of dol­lars potentially.”

Madar also said that since a sin­gle par­ty with cen­tral access may be forced, influ­enced, or coerced by author­i­ties and thus could be com­pro­mised, to what extent should any one per­son have crit­i­cal influ­ence over a decen­tral­ized platform?

Planning for the Worst

Affect­ed par­ties are already plan­ning for the worst.

Rather than wait any more after a week-long hia­tus, Coreum found itself prompt­ed to make a strate­gic deci­sion, accord­ing to Bashash.

Coreum’s workaround is a “non-cus­to­di­al solu­tion” to “empow­er users to burn their Core tokens direct­ly on the XRPL chain, which can then be retrieved on the Coreum main­net,” said Bashash, adding that the objec­tive behind the deci­sion is to avoid future dis­rup­tions of this magnitude.

“If this sit­u­a­tion is not prompt­ly rec­ti­fied, it could have sub­stan­tial reper­cus­sions on the broad­er cryp­tocur­ren­cy mar­ket, caus­ing a decrease in con­fi­dence in the secu­ri­ty of DeFi plat­forms and bridges, lead­ing to mar­ket insta­bil­i­ty,” said Bashash.

Coreum is cur­rent­ly trad­ing up 2.7% in the last 24 hours at $0.19.

Bridge To Nowhere

The cen­tral point of fail­ure result­ing in a ser­vice sus­pen­sion is among the rea­sons Brent Xu, founder and CEO of DeFi lend­ing pro­to­col Umee, points to bridges as “one of the main risks you need to look at.”

“The bridges right now are all real­ly bad because they’re very dan­ger­ous,” said Xu, adding that they can be hacked or allow for val­ida­tors to be tar­get­ed, result­ing in laps­es of service.

Building Around Roadblocks

Madar said the devel­op­ing sit­u­a­tion with Mul­ti­chain will come to stand as a future ref­er­ence point to sin­gle points of com­pro­mise that will serve as a les­son for build­ing “a more resilient ecosystem.”

Xu said that “any­one who’s build­ing oth­er bridges or even improv­ing on Mul­ti­chain in the future will take lessons in the past,” he said. “But the prob­lem is that the lessons of the past for cryp­to are very expensive.”



Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *