Cosmos’ $8B Ecosystem Endangered by Critical Vulnerability

Last week’s BNB Chain attack led Cosmos developers to inspect their IBC code. They found a critical security vulnerability that endangered every IBC-enabled blockchain.

Cosmos Compromised

It appears the entire Cosmos ecosystem was endangered by a single vulnerability.

According to an announcement posted today in the Cosmos Hub governance forum by co-founder Ethan Buchman, lead developers recently discovered a “critical security vulnerability that impacts all IBC-enabled Cosmos chains, for all versions of IBC.”

Cosmos is a decentralized network of blockchains connected through the Inter-Blockchain Communication protocol (IBC), which enables users to hop from one Cosmos blockchain to another seamlessly. At the time of writing, there are 42 IBC-enabled blockchains, including Cosmos Hub, Osmosis, Cronos, and Evmos. According to the project’s website, the market capitalization of all IBC-enabled chains together reaches $8.18 billion.

Other major blockchains such as OKX Chain, Luna Classic, and Thorchain have also integrated IBC in the past. For various reasons, however, they have either deactivated the function or never fully enabled it in the first place. BNB Chain is one of these projects. The recent attack against it (during which a hacker drained $566 million from the blockchain’s bridge) incentivized Cosmos developers to research whether other IBC blockchains may be vulnerable to the same exploit. 

Buchman stated that measures had already been taken to patch major IBC blockchains. The patch was first made available privately to give developers and validators the time to update their chains before the vulnerability was publicized. According to him, more than a third of a blockchain’s voting power must apply a patch for the project to be safe. The Cosmos SDK will release a public version of the patch on October 14 at 14:00 UTC. Buchman advised all Cosmos chains and validators to upgrade to the public patch as soon as possible, even if they’d already integrated the private patch. 

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, ATOM, OSMO, and several other cryptocurrencies.