Major Blockchains Found to Contain Code Allowing for User Fund Freezing
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A new report by Bybit’s Lazarus Security Lab has shed light on a concerning trend within the blockchain industry. According to the study, 16 major blockchains have been discovered to contain code that enables them to freeze or restrict user funds in response to security incidents such as hacks and exploits.
The report, which is titled "Blockchain Freezing Exposed: Examining the Impact of Fund Freezing Ability in Blockchain," marks a significant milestone in understanding how blockchains can intervene in user transactions to mitigate the effects of large-scale security breaches. Bybit’s Lazarus Security Lab conducted an extensive analysis of 166 blockchain networks using a combination of AI-driven detection and manual review.
The study found that while currently, 16 chains possess fund-freezing functions, another 19 could potentially introduce similar mechanisms with only minor protocol adjustments. This has significant implications for the decentralized nature of blockchain technology, as it raises questions about the balance between security measures and user autonomy.
Fund-Freezing Mechanisms on Major Blockchains
The report identified three distinct categories of fund-freezing mechanisms:
- Hardcoded freezing: This occurs when blockchains have built-in code that directly restricts or freezes user funds (e.g., BNB Chain, VeChain).
- Configuration-based freezing: Certain chains use validator or foundation settings to enable freezing functions (e.g., Sui, Aptos).
- On-chain contract freezing: Some blockchains employ system contracts to execute fund-freezing actions (e.g., HECO).
Notable Cases Highlighting Fund-Freezing Capabilities
Several notable incidents have demonstrated the potential benefits and implications of having fund-freezing functions:
- Sui responded quickly after a hack by freezing $162 million in stolen assets.
- Following the Cetus hack, Aptos implemented blacklisting capabilities to prevent further exploitation.
- BNB Chain used hardcoded blacklists to contain damage from a $570 million bridge exploit.
- VeChain set an early precedent in 2019 by freezing funds related to a $6.6 million breach.
- Cosmos’s advanced account design may enable future use of fund-freezing interventions.
These incidents illustrate the importance of emergency response mechanisms, particularly in the context of large-scale security breaches. Bybit believes that transparency around these measures is crucial for fostering trust within the industry.
Transparency and Governance
The study emphasizes the need for blockchain networks to openly disclose their ability to intervene in on-chain activity and share this information with users. This would enable more informed decision-making and help build lasting confidence within the sector. As crypto continues to mature, clear and transparent safety mechanisms will be essential for establishing trust among users and institutions.
Conclusion
The findings of Bybit’s Lazarus Security Lab report have significant implications for the development of blockchain technologies and their deployment in real-world applications. By shedding light on fund-freezing functions within major blockchains, this research underscores the importance of balancing security with user autonomy. As transparency becomes a core pillar of blockchain governance, projects must prioritize open communication about emergency intervention mechanisms to foster a lasting trust among stakeholders in the growing world of decentralized finance.
Stay tuned for more updates and information from Bybit regarding their endeavors in advancing Web3 innovation and driving the growth of decentralized ecosystems through secure custody and cutting-edge technologies.