Router Nitro’s New GlassSwitch: a Community Pause Preventing Network-Wide Destabilization

6 min readMar 20, 2024

The Strategic Importance of Swift Action in DeFi Security

Building in the bridging world introduces us to a fascinating paradox: it is often perceived as a bridge far from the bastions of security! This perception is partly due to the intense focus on fortifying the internal sanctums of the technology — through rigorous audits, the implementation of layered security measures, and so on.

However, this inward-looking approach has a blind spot: the external factors that often go unnoticed or underestimated.

*Always looking for threats is a security strategy. The citadel must be secured.*

In this post, we will understand these external threats that loom over Bridging with an example of the Harmony Bridge Attack. While we acknowledge their existence, we must also understand their impact and the strategies required to mitigate them. This is where Router Nitro’s GlassSwitch comes into the picture!

The Harmony Bridge Attack

Let’s first try to understand the hack. Harmony had Horizon Bridge, which served as its canonical bridge. When discussing the concept of a “canonical bridge” about a blockchain, it refers to the primary or official bridge endorsed and supported by the developers or foundation of that specific blockchain.

Horizon was responsible for bringing funds into the Harmony ecosystem. The process worked by locking tokens on Ethereum and minting the equivalent tokens on Harmony, ensuring a 1:1 ratio between the tokens on both chains. For example, if 100 USDC were locked on Ethereum, 100 USDC would be minted on Harmony, creating a backed token value.

However, due to a compromise of their multi-sig keys, hackers were able to unlock the assets on Ethereum without providing the equivalent assets on the Harmony side. This resulted in assets on Harmony not having corresponding backing on Ethereum.

Let’s illustrate this with numbers. For example, Horizen had 100 USDC locked on Ethereum, and 100 USDC was minted on Harmony. After the hacker exploited the Horizen bridge, the 100 USDC were withdrawn from Ethereum, leaving the 100 USDC on Harmony without any backing.

Consequently, there was almost no USDC locked on Ethereum, and 100 USDC were present on Harmony. This caused the peg of assets on Harmony to decline, eventually rendering them worthless, as the hackers withdrew all the USDC on Ethereum, leaving the entire USDC supply on Harmony unbacked.

*The Harmony users doing activity there were left in disbelief. They had assets, but they weren’t backed anymore.*

This incident led to a debacle for the Harmony chain–a complete loss of the asset’s value present on the chain.

The Ripple Effect: When Bridges Don’t Pause

As a lot of bridges in the market were providing bridging services for Harmony, and had these bridges not taken immediate action to pause interactions with Harmony in the wake of this attack, the repercussions could have been far-reaching:

1. Accumulation of Valueless Assets

Bridges that continued to operate without pausing would risk accumulating a substantial amount of the compromised asset (in this case, USDC) on Harmony, which essentially holds no real value. This discrepancy arises because these tokens no longer have the backing on the original chain (Ethereum) due to the exploit. The immediate consequence would be a significant financial loss for the bridge and its users, as they would be left holding assets that cannot be redeemed or used elsewhere at their intended value.

2. Loss of User Trust and Reputation Damage

Trust is the cornerstone of any financial service, especially in the decentralized finance ecosystem, where users often have to navigate without the traditional safety nets of centralized finance. A bridge would demonstrate a lack of responsiveness and responsibility toward safeguarding user assets by not pausing services in response to the attack. This could lead to a significant erosion of trust among its user base, damaging its reputation and potentially causing a substantial decrease in user activity and liquidity.

3. Increased Regulatory Scrutiny

Security incidents that lead to user losses often attract the attention of regulators. A bridge’s failure to act in the wake of such an event could be seen as negligence, potentially inviting stricter regulatory scrutiny, investigations, and even sanctions. This regulatory response could impose additional operational burdens on the bridge, up to and including the requirement to make affected users whole.

4. Exploitation by Bad Actors

Continued operation post-exploit opens the door for bad actors to exploit the situation further. They could, for example, exchange a large amount of devalued or unbacked assets on the compromised chain for fully backed assets on another chain, effectively draining the bridge’s reserves of valuable assets. While typically a legitimate strategy in market discrepancies, this kind of arbitrage becomes predatory under these circumstances, exacerbating the financial impact on the bridge and its users.

5. Network-Wide Destabilization

The continued acceptance and exchange of devalued assets can lead to a ripple effect across the entire network, affecting other interconnected services and platforms. As these assets circulate, they can undermine the stability and integrity of other pools, tokens, and services within the DeFi ecosystem, leading to broader market instability and loss of confidence in interconnected blockchain technologies.

Harmony’s attack underscores the need for vigilance and swift actions in managing cross-chain operations to ensure long-term health and trust in the decentralized finance landscape!

And we’re calling this Swift Action–GlassSwitch!

GlassSwitch: A Community-Powered Early Warning System

Recognizing our community’s collective vigilance as one of our greatest assets, GlassSwitch, our community pause enables any user to report suspicious activities or vulnerabilities on any particular chain by putting up a stake. To activate a pause, for instance, on Avalanche, users can stake an amount ranging from 12.5 to 250.0 AVAX.

*The power of community surveillance is more than any individual’s*

Should a user’s report on a potential threat or anomaly turn out to be accurate, their staked amount is returned in full, accompanied by additional rewards as a token of appreciation.

In cases where a claim is investigated and found to be inaccurate, the staked tokens are not returned. This penalty serves as a thoughtful counterbalance, ensuring that the power granted by GlassSwitch is exercised with the utmost integrity and consideration for the collective good of the Router Nitro Bridge community.

This mechanism directly tackles the issue of accumulating valueless assets. It allows for the immediate reporting and potential pausing of transactions involving compromised assets, narrowing the window of opportunity for malicious actors to exploit vulnerabilities.

Moreover, this community pause embodies the democratic values inherent to decentralization, where every user is given an equal opportunity to contribute to the ecosystem’s security. This is decentralization in action — empowering individuals, ensuring transparency, and promoting a shared sense of responsibility.

*Nitro’s community pause feature ( GlassSwitch) can be accessed from the front page under the new section.*

As we move forward, we are excited to see how this feature will evolve and how our community will utilize it to contribute to a safer DeFi ecosystem. Please note that invoking the GlassSwitch feature requires committing some assets, and those assets can be penalized if the report is frivolous. However, if the report is correct — you receive a lot more back!

We invite you to stay connected with us for further updates and join our community across our various social platforms.