The crypto world woke up to a shock on October 6, when BNB chain, the blockchain of Binance, fell prey to a bridge hack amounting to nearly $570 million. The threat posed a significant threat to the trust that Binance has built among millions of investors over the years. Decentralization and transparency are two principles the crypto industry stands on. It aims to enhance the security of global finance. But such hacks are a massive setback to the campaign.
Thankfully, Binance managed to reduce to money stolen from the hack to just $100 million against the compromised amount of around $570 million. Surprisingly, partial centralization played a key role in it. How? Let’s understand.
Binance validators halted the BNB chain temporarily to prevent the hackers from siphoning off the funds.
“An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly,” Binance CEO Changpeng Zhao wrote on Twitter.
What Are Chain Validators
Validators are computers that maintain a blockchain’s integrity. Validators are mainly used by blockchains that use a proof-of-work consensus mechanism. These validators either store the entire blockchain or an abbreviated version of the chain. Blockchains like Bitcoin and Ethereum have thousands of validators. It is these validators that acted on time to protect the integrity of the BNB chain. Validators have three key functions:
- Ensuring the correct formatting of new transactions
- Computing the hash fingerprints from block to block to prevent any unwarranted changes to the chain
- Validating every new block on the chain for the proper functioning of the chain
BNB Chain has 26 validators as of now, and the maximum it can have is 45. Only 21 BNB validators can be active at one time. This number is substantially low in comparison to BTC or Ethereum chain validators. 19 of the BNB chain’s 26 validators came together to halt the chain. The action ensured that the hackers lost access to the chain before they could successfully smuggle the entire fund. With such a low number of validators, the BNB chain is centralized to a large extent if we take other chains into consideration. It is the partial decentralization of the chain, that allowed the validators to collaborate and act in time.
Partial Decentralization To Minimize The Impact Of Bridge Hack
Censorship prevention demands the anonymity of validators. Therefore, a high degree of collaboration is required to halt a chain like BNB. This would have been highly challenging in the case of a chain like Bitcoin or Ethereum. Therefore, halting a chain is nearly impossible without having a certain degree of centralization. In the case of Binance, users can see who are the BNB validators contributing to the integrity of the chain.
Thankfully, the partial decentralization acted in favor of Binance this time. However, the incident adds more weight to the argument that the BNB chain is highly centralized. But it is also cheaper than Ethereum. That is why emerging protocols continue to deploy their tokens on the BNB chain.
Final Word
The debate of centralization vs decentralization is likely to continue for years. But this incident proves that the crypto industry is far from achieving complete decentralization. Incidents like the Binance bridge hack prove that a lot is left to be done on the security front. Expecting to lead the digital economy without enhancing security is unlikely to bear desired results. A secure crypto economy is vital to the mass adoption of digital assets.