Single Crypto Wallet Controls 12 Networks, Posing $121M Risk Amid Centralization Concerns
Summary:
A single multisignature crypto wallet that holds authority over twelve different blockchain networks could endanger around $121 million across all platforms if compromised. The networks, created via the Conduit rollup creation software, require three out of the five team members' signatures for any transaction. Future upgrades aim to enhance security further by increasing the required signatures to five out of seven. Critics argue that despite reducing transaction fees for Ethereum users, Layer 2 networks are too centralized. Advocates contend that these will become more decentralized, as outlined by Ethereum founder Vitalik Buterin's decentralization plan.
One multisignature crypto wallet holds authority over twelve diverse blockchain networks, and its compromise could result in a financial disaster, involving a potential $121 million loss across all platforms. These networks, including Zora, Aevo, Hypr, Orderly, Ancient8, Lyra, Mode, Pgn, Parallel, and Metal, were conceived using the Conduit rollup creation program, as disclosed to X by researcher Luca Donno from L2Beat on May 19. Conduit founder Andrew Huang advised Cointelegraph that a minimum of three out of five team signatures are required for any transaction through this wallet. The safety of these signatures lies in hardware wallets, and a breach would require physical access to at least three out of five individuals.
Huang anticipated upgrades to the system within the forthcoming weeks, wherein the requisite number of signatures would increase from three to five out of a total of seven, further decentralizing the risk. He added that decentrality would have greater prospects once the second layer moved onto the 'stage 2' of the process.
Information reveals that multiple networks based on Conduit use the same wallet for duties, such as enhancing the network's bridge. Data from L2Beat indicates that the Aevo account possesses an 'unlimited upgrade power' and might gain complete control over all funds. The total value locked (TVL) in Aevo totals more than $72 million.
The Conduit network Lyra, with over $20million TVL, also shares the 'ConduitMultisig' wallet, with the possibility of total fund access. Statements mirroring this can be found across the pages of other Conduit networks, including Zora, Hpyr, Orderly, Ancient8, Mode, Pgn, Parallel, and Metal. Cumulatively, these blockchains hold nearly $121 million, all linked to one multisignature wallet.
It is said that Layer 2 networks have significantly reduced transaction fees for Ethereum users. However, they face criticism for being too centralized and not well-equipped to facilitate the widespread uptake of crypto. Layer 2 developers argue that these blockchains will become increasingly decentralized as outlined in the decentralization plan published by Ethereum founder Vitalik Buterin in November 2022. The favorite exploit of the Lazarus group, often associated with crypto hacks, has been exposed recently in a magazine analysis.
Published At
5/22/2024 4:48:20 AM
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