How to Securely Use Bridges in DeFi
When it comes to DeFi, bridges play a critical role in enabling cross-chain transactions, allowing users to move assets between blockchains.
This flexibility opens up more opportunities for users, but it also introduces security risks. As you explore these opportunities, it’s essential to understand the best practices for using bridges securely to protect your assets.
What Are Bridges in DeFi?
Bridges in DeFi allow users to transfer crypto assets from one blockchain to another, addressing the issue of liquidity spread across multiple networks. For example, if you want to use assets on Ethereum to interact with a protocol on another blockchain like Base, a bridge can facilitate the transfer, making cross-chain engagement seamless. However, the convenience of bridges comes with certain risks, particularly around approval exploits.
Understanding Approval Exploits
When using a bridge, the protocol will request an initial approval to access your tokens. This is a common practice for any new interaction with a DeFi protocol or dApp, but it’s also a potential vulnerability. Approval exploits occur when malicious actors abuse token approvals to access more assets than intended, often resulting in financial losses for the user.
For instance, let’s say you’re bridging $USDC from one chain to another to buy tokens on a decentralized exchange. You would need to approve the bridge protocol to access your $USDC before completing the transaction. If you approve an excessive amount, that large approval remains vulnerable to potential exploits unless revoked.
Key Security Tips for Using Bridges
- Limit Approval Amounts: The safest way to use bridges is to limit the token approval to the exact amount you intend to transfer. If you’re only bridging 20 $USDC, approve access to 20 $USDC only. By limiting the approval amount, you minimize your exposure to potential exploits, as unused approved funds won’t be accessible to malicious actors.
- Use Multiple Smaller Transactions for Large Transfers: If you need to bridge a substantial amount, consider breaking it into smaller transactions. This approach ensures that only a fraction of your assets is at risk at any given time. For example, instead of transferring a large sum all at once, complete multiple smaller approvals and transactions to add a layer of security.
- Revoke Token Approvals After Use: Once you’ve completed your bridge transaction, revoke the token approval to prevent unauthorized access to your assets. You can do this through platforms like revoke.cash, which lets you review and remove any active token approvals. Regularly revoking approvals after transactions keeps your wallet more secure and reduces the risk of leftover authorizations being exploited.
Protocols with Built-In Safety Features
Fortunately, some DeFi protocols incorporate safety features that only request token approval for the approximate amount required, preventing excessive approval requests by default. Preon Finance is one example of a protocol that prioritizes user security in this way, ensuring that only the necessary approval amount is requested. As Preon prepares for the release of V2, it continues to enhance its security and efficiency, bringing more safety-conscious DeFi solutions to the Sphere ecosystem.
Final Thoughts on Using Bridges Securely
Bridges offer DeFi users a powerful tool to move assets across blockchains, expanding the possibilities for cross-chain interaction. However, with this power comes the responsibility to secure your assets properly. By limiting approval amounts, breaking up large transfers, and revoking token approvals after each transaction, you can enjoy the benefits of DeFi bridges while keeping your assets safe.
To learn more about upcoming security features in the Sphere ecosystem and stay updated on Preon’s V2 release, join our Discord community. Engaging with the community can provide you with additional insights on best practices, so you can navigate DeFi safely and confidently.