New Ethereum Improvement Proposal Seeks to Prevent Hacks

The July 7 Ethereum Improvement Proposal (EIP) seeks to standardize how network tokens are connected.

EIP-7281, or the “Sovereign Bridged Token” standard, enables token issuers to create canonical bridges across multiple networks.

The proposal was co-authored by the creator of the Connext bridging protocol, Arjun Bhuptani.

In a July 7 social media post, Bhuptani asserted that the protocol would assist in preventing incidents similar to the Multichain incident on July 6, which some experts have described as a hack.

According to the proposal’s discussion page, token issuers can specify a list of canonical bridges.

Only bridges added to this list were authorized to mint official versions of the issuer’s token.

Additionally, issuers can restrict the number of tokens a bridge can mint. The issuer can modify these parameters at virtually any time.

This proposal, according to Bhuptani, will ensure that “ownership of tokens is shifted away from bridges (canonical or 3rd party) and into the hands of token issuers themselves” and will limit losses if a bridge’s security is questioned:

“In the event of a hack or vulnerability for a given bridge (e.g. today’s Multichain hack), issuer risk is capped to the rate limit of that bridge and issuers can seamlessly delist a bridge without needing to go through a painful and time-intensive migration process with users.”

As all bridges will issue the same official token, according to Bhuptani, the proposal will also prevent user experience issues in decentralized finance.

According to him, this will eventually eliminate the need for multiple versions of the same token.

Circle, the issuer of stablecoins, has already developed the Cross-Chain Transfer Protocol (CCTP) to catalog official bridges for its token, USD Coin.

According to the proposal’s notes, EIP-7281 intends to implement the core concept behind CCTP while also attempting to make this solution applicable “more broadly to all tokens.”

Circle and Tether have blocklisted addresses associated with the Multichain incident, preventing $65 million worth of USDC and Tether from leaving these addresses.