Researchers at Stanford University have come up with a new solution for crypto thefts. They have created a prototype of a new “reversible transaction” feature on Ethereum. The researchers have agreed that it is not a finished task for theft yet, but it can provoke discussions throughout the blockchain community to get better solutions for dealing with crypto theft.
Why Are Crypto Scams Increasing?
Crypto crime has become a fast-growing enterprise. There are mainly two ways of committing crypto theft: stealing directly or using schemes to trick people into handing cryptocurrencies over.
In 2021, crypto criminals stole around $3.2 billion worth of cryptocurrencies. That is a fivefold increase from 2020. In 2022, crypto investors have also been struck by hackers and scammers. Blockchain Bridge is one such avenue that has made stealing cryptocurrency easier.
Role of Blockchain Bridge
Blockchain bridges connect networks to enable the fast swaps of tokens, thus making it very popular among users to make transactions. But crypto enthusiasts bypass a centralized exchange and a highly unprotected system in using them.
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Since the start of this year, a total of $1.4 billion has already been lost to breaches on these cross-chain bridges. The reason behind the vulnerability of bridges is their sloppy engineering. Only a limited number of validators must be convinced to approve a transaction.
How Will This “Reverse Transaction” Prototype Work?
Blockchain researchers from Stanford, including Wang, Dan Boneh, and Qinchen Wang, have stated that this prototype will not replace any ERC-20 tokens. They have explained that it will simply allow a short time window post-transaction for thefts to be delayed and possibly restored.
This prototype is not going to make Ethereum reversible. But the users will now get an option to submit a freeze request on the assets to a government contract if their funds get stolen.
The freeze request will be approved or rejected by a decentralized court judge within two days. Both sides of the transaction will get a chance to provide evidence to the judges to reach a correct decision. Researchers have also developed another algorithm that provides a default freezing process for tracing and locking stolen Non-fungible tokens (NFTs) funds.
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This feature will freeze enough funds in the thief’s account to cover the stolen assets. But they have also clarified that it will do so only when there is a direct flow of transactions from the theft.