Market Analysis Report (04 Feb 2022)

The parent company of the popular cross-chain blockchain bridge Wormhole, Jump Trading, has stepped in to backstop funds in a move that could be preventing widespread damage in the Solana decentralized finance (DeFi) ecosystem.

Wormhole, one of the most popular bridges linking the Ethereum and Solana blockchains, was this week hacked for 120,000 ETH worth over $320 million. The attacker moved the majority of the funds on Ethereum, while keeping 40,000 wrapped ETH on Solana.

Jump Trading, a large crypto venture capital and trading firm, has now confirmed it covered the funds, preventing potential chaos on Solana’s DeFi ecosystem.

Cross-chain bridges work by taking an asset and locking it in a smart contract to then issue a parallel asset on the bridged chain. The incident could see ETH circulating on the Solana blockchain while being unbacked.