Bridge Security in the Modular Stack

In discussing bridge security with Arjun Chand, given recent events, I find it quite thought-provoking. As such, I've decided to compile a quick summary for general educational purposes.

With an increasingly modular stack (diff layers/components handling special task in a transaction lifecycle), blockchain interoperability becomes the crucial glue in a successful transaction lifecycle. However, it also means wider attack surface because of these links.

As Arjun it elegantly in 2022, With Bridges, Trust is a Spectrum (from trusted to trustless): Externally Verified (no stake, bonded, insured), Optimistically verified (fraud proof with challenge window), Locally verified (HTLC), Natively verified (light clients/relays, ZK bridges).

Then going back to the modular landscape, with generalized L2 rollups and more use case specific rollups L3, intuitively, the lower part of the stack, the higher amount of capital locked. To put in an analogy, L1s are countries, L2s metropolitans and L3s satellite cities/towns. Similar to the physical world, the connection infrastructure between these would be different, with additional consideration of the type of use cases developed on L2s and L3s, informing what properties of these interop infrastructure to optimize for (security, cost, speed etc.) and the types of defense strategy to adopt during black swan.

For instance, if it’s a gaming L3, high velocity micro transactions with liquidity (no lock up), then a trusted bridge might be suitable with volume limit given the desirable traits of reasonable cost and speed and ability to handle certain security assumptions (again lower capital amount and volume limit). If it’s a perp platform as an L3 with lock up, then bridges on the more trustless side of the spectrum might be suitable given consideration of speed to exist given extraordinary events.

In case something serious does happen, the interop solution selected should have several defense mechanisms in place (defense in depth), insurance to cover losses, freeze state (if native) or bridge (third party), or possible amputation or containment to prevent further contamination.

Materials for reference:

https://blog.li.fi/li-fi-with-bridges-trust-is-a-spectrum-354cd5a1a6d8

https://qiceciliafeng.substack.com/p/modular-thesis-part-i?utm_source=profile&utm_medium=reader2

https://qiceciliafeng.substack.com/p/modular-thesis-part-ii?utm_source=profile&utm_medium=reader2

https://medium.com/layerzero-official/layerzero-v2-deep-dive-869f93e09850