The sudden crisis surrounding Multichain, a major bridge connecting 92 different blockchains, has shaken the crypto ecosystem. Speculations of team members’ arrests and technical problems hindering token withdrawals have filled the void left by the platform’s silence. This incident serves as a reminder that trusting a bridge involves risks beyond the possibility of hacking, which is not the most prominent risk for bridge users.
Binance Cautions Traders and Suspends Deposits in Multichain-Bridged Tokens
During the crisis, Multichain experienced a reported failure, causing transactions on Fantom to lose their dollar peg. The incident underscored the dependence on bridged assets in the Fantom ecosystem, particularly any USDC as the dominant stablecoin. USDC tokens on Fantom depend on bridges to maintain their value, prompting Binance to caution traders about stablecoin issuers.
The response from major crypto players highlights the seriousness of the risk faced by bridge users. Binance suspended deposits in 10 Multichain-bridged tokens “while we await clarity from the Multichain team,” while the bridge aggregator Li.Fi shuttered access to Multichain in light of the uncertainty.
Safeguarding Crypto Assets by Storing on Original Chains
The market has responded to the news with MULTI token, Multichain’s namesake asset, dropping by 54%. Indeed, it can be argued that this fall is a reflection of the many unanswered questions surrounding the platform. That said, not everyone is panicking. Parsec’s data shows that the overall numbers like total value locked remain rather steady despite some outflows to other chains. Phantom CEO Michael Kong assured the community that the “multichain bridge is fully operational and safe.”
The crisis reminds the crypto community to minimize reliance on cross-chain bridges due to the associated risks. Trusting a bridge, as seen with Multichain, can have high stakes even without a hack. To keep your crypto assets safe, it’s advisable to store them on the original chain.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
