GuShiio.com As the main asset stolen this time, what far-reaching impact will the Ethereum ecosystem have? Perhaps it is something the industry needs to think further next.
Author: Frank, PANews
Crypto exchanges reproduce major security incidents, after Bybit Exchange was stolen. On the evening of February 21, 2025, online detective ZachXBT issued an alert on platform X, saying that an abnormal outflow of funds had been detected at an address associated with the Bybit exchange, involving an amount of US$1.46 billion. Security teams such as Slowfog and PeckShield confirmed that this incident was caused by hackers using UI spoofing attacks to control Bybit’s ETH multi-sign cold wallet, stealing 491,000 ETH (approximately US$1.4 billion based on the day’s price). After the news was exposed, the market quickly fell into panic: users ran and withdrew coins, ETH prices plunged 8%, and contracts across the network exceeded US$400 million-a FTX-style crash seemed close at hand.
Fortunately, Bybit officials moved quickly and explained the hacking incident. It was that an ETH cold wallet was stolen, other types of assets were not affected, and they ensured that there were sufficient funds to meet users ‘demand for withdrawal. Coupled with the transfer of more than US$4 billion in funds from exchanges such as Bitget and Binance in response to the crisis, the theft was temporarily subsided, and the price of Ethereum returned to above US$2700 after a day of diving.
The ripples of the incident have not yet subsided, but the hacker theft incident once again sounded the alarm for the industry, especially at the moment when the FTX incident is coming to an end and payments begin. As the main asset stolen this time, what far-reaching impact will the Ethereum ecosystem have? Perhaps it is something the industry needs to think further next.
Cross-chain bridge fund pool is limited, hackers may have difficulty selling coins in a short period of time
Market conditions bear the brunt and are the most influential part. Before the news broke, ETH prices peaked at $2845. Driven by market panic, ETH prices fell by 8% for a short time, and positions across the network broke out by more than US$400 million. Thanks to Bybit’s rapid response and liquidity assistance from exchanges such as Bitget and Binance, ETH prices recovered their lost ground within 24 hours, and market panic was temporarily alleviated.
But after all, most of the funds stolen by hackers have not yet been sold. After some time, hackers urgently needed to wash the funds through on-chain methods and exchange them into other currencies. Therefore, there is still a certain test of the digestion ability on the ETH chain.
In addition, judging from the analysis of many security companies, the initiator of this time is the North Korean hacker group. If this inference is true, then the possibility of funds being recovered is very slim.
According to Artemis data, ETH’s chain outflow in the past seven days was only US$196 million, and the inflow amount was approximately US$149 million. If hackers choose to transfer these funds to other chains in a short period of time, the amount of funds flowing out of ETH’s chain may increase by about tenfold in a short period of time. It is inevitable that the depth of the ETH chain will be under pressure for some time to come.
However, the flow pools of most cross-chain bridges cannot withstand such a large transfer of funds alone. Taking the chainflip cross-chain bridge used by hackers to transfer funds on February 22 as an example, the total liquidity in its flow pool is about 17 million US dollars. It seems that other cross-chain bridges are also difficult to bear such amounts of capital.
On the other hand, the ETH ecosystem may be the most decentralized public chain except Bitcoin. Hackers may not transfer their funding options to other public chain ecosystems. From this perspective, hackers may still mainly mix currencies in a short period of time and will not carry out large-scale fund conversions on the chain. Therefore, the in-depth test of the chain may not be achieved overnight, and the impact on the market will be limited if it is gradually digested.
Reflecting on the “complexity premium” of smart contracts, should Ethereum move towards simplification?
In addition to the market impact, Ethereum’s technical route may also be affected by this impact and make some changes. Looking back at a similar hacking incident in 2024, hackers also stole ETH tokens during the theft of WazirX.
The reason is that on the one hand, ETH is the second largest token with a market value after BTC. Its market depth will not collapse due to one or two attacks. It is a valuable asset type for hackers. On the other hand, it is also related to Ethereum’s complex smart contract functions. Compared with other new public chains such as Solana, Ethereum’s Turing completeness gives smart contracts infinite possibilities, but it also leads to complex contract interaction levels (such as multi-signature wallets relying on multiple proxy calls from Safe contracts), and the attack surface is much larger than Bitcoin’s UTXO model or Solana’s native account model.
Therefore, as more and more security attacks occur in Ethereum, the next step of Ethereum’s technical route may be thinking about how to simplify smart contracts or add confirmation by biometric or similar hardware devices at the application level of multi-sign wallets. Technical changes.
From an ecological perspective, projects in the Ethereum ecosystem that improve security through hardware may usher in certain opportunities. Including Safe used in this incident, it may force the introduction of “secondary semantic verification”(such as visual verification of signature of transaction content) in the future, similar to the physical confirmation mechanism of a hardware wallet.
Of course, the above potential changes exist on the premise that the Ethereum ecosystem will regard this incident as a wake-up call. After all, in the state of poor data performance, security has become the last moat of the Ethereum ecosystem. If security is lost, it may usher in a wider market disappointment with the Ethereum ecosystem.
The industry’s alarm clock, it’s time to build a hacker firewall
Of course, in this incident, there will be a more far-reaching potential impact on the entire encryption industry ecosystem. For example, the way exchanges manage assets may need more reforms.
Or will this lead to exchange insurance business? Previously, the FTX thunder caused various exchanges to pay attention to asset transparency and disclose the scale of their assets. From a certain perspective, the widespread implementation of this measure has become an important reason why Bybit has not made the same mistake today. On the other hand, another reason why this hacking incident failed to cause a large-scale run was that multiple exchanges and industry institutions provided timely assistance and quickly stabilized market sentiment.
Judging from the previous FTX thunder storm, the last straw that overwhelmed the camel was the run. Fortunately, Bybit received assistance from its peers, but in any case this assistance was still essentially a human factor that weighed the pros and cons. If another exchange experiences the same crisis in the future and fails to receive assistance from its peers after evaluation, will it bring the market into the FTX cycle? Therefore, perhaps exchanges or third parties have more motivation to promote the development of exchange insurance business through this incident.
In addition, encryption has been suffering from North Korean hackers for a long time. In order to avoid similar incidents, on the one hand, the industry has further strengthened its respective security levels. On the other hand, whether the cryptographic world will launch a wave of anti-hacking firewall construction has also become an issue worthy of attention throughout the industry. For example, should each project party establish a unified firewall to prevent the flow of hackers ‘funds? Of course, this process will be much more complicated, and how to complete such a measure without sacrificing the degree of decentralization may become the main topic of discussion. Just as CZ suggested that Bybit stop withdrawing coins after the incident, it also caused a lot of controversy.
However, the greater significance of establishing a hacker firewall may not be to prevent another exchange from falling, but to those users who are frequently harassed by hackers but no one pays attention. After all, they cannot get the entire network to cooperate to stop hackers, and every attack has a greater impact on retail investors.
Although the Bybit incident did not turn into a systemic collapse in the end, the exposed cold wallet interaction vulnerabilities, cross-chain bridge liquidity bottlenecks and the temporary nature of the industry mutual assistance mechanism have sounded alarm for the Ethereum ecosystem and even the entire encryption industry. Only by building an anti-attack underlying architecture and an institutionalized risk buffer mechanism can the crisis truly turn into an evolutionary driving force.
