Viewing a single comment thread. View all comments

Owlstorm t1_j5kngrt wrote

Reply to comment by More_Ad_6196 in eli5 - Wrapped tokens - crypto by More_Ad_6196

There are a few loopholes.

51% is an obvious one- send bitcoin to get WBTC and then reverse the transaction on the bitcoin chain. Sell the WBTC to double your "money". It's one of the big defi piñatas.

Not happening with bitcoin any time soon (we'd need several more halvings), but you can see it with smaller tokens.

Also the usual boring hacking stuff like input validation and social engineering.

1

More_Ad_6196 OP t1_j5ks37k wrote

So to put it in ELI5 terms, someone can take a Bitcoin, wrap it, sell the WBTC on Ethereums chain and reverse the transaction to get back their BTC while profiting off of the WBTC sale?

2

Owlstorm t1_j5ksie0 wrote

Yes

1

More_Ad_6196 OP t1_j5ksnfj wrote

Woah

2

lemoinem t1_j5lr8bz wrote

Not specific to wrapped coins though. Any transaction that has part of it on the blockchain and part off the blockchain is vulnerable, by design.

Prep (send) the ON part, transact (receive) the OFF part, Revert (take back) the ON part.

You now have both the money associated to both the ON and OFF part.

That's essentially doing a transaction with a credit card and doing a charge back once you recieved the goods. Nothing new here...

2