Decentralized finance (DeFi) token bridges are essential for interoperability between different blockchain networks. However, these token bridges can have some pitfalls such as high transaction fees, slow transaction speeds, and lack of security. And Bitcoin’s more established network, huge use base, and security model make it ideal for improving DeFi token bridges’ performance.
By leveraging Bitcoin’s strengths, DeFi token bridges can solve some of the pitfalls that exist in the DeFi ecosystem, currently.
Bridge Exploits in DeFi
Bridge exploits in DeFi refer to vulnerabilities or weaknesses in the technology used to transfer tokens or assets between different blockchain networks. These exploits can allow malicious actors to steal or manipulate user funds, potentially resulting in significant financial losses.
Over the past few years, there have been several bridge exploits in Defy. As in 2020 the infamous “Flash loan” attack on the bZx DeFi platform, where an attacker exploits a vulnerability in the platform’s smart contract code to manipulate the price of a token and profit from the resulting arbitrage opportunities.
Similarly. In the 2021 hack of the Poly Network DeFi platform, an attacker exploited a vulnerability in the platform’s cross-chain token transfer mechanism to steal over $600 million in various cryptocurrencies.
A Layer-2 Blockchain on The Bitcoin Network
Mintlayer is a new layer-2 blockchain platform on the Bitcoin network. It aims to connect its sidechain to the Bitcoin community with as little friction as possible. It makes DeFi more resilient to exploits, a new approach which removes this weak link between blockchains.
Source: https://www.thecoinrepublic.com/2023/03/12/a-latest-layer-2-solution-that-solve-defi-token-bridge-pitfall/