A saturation rescue for Bybit

Author: Zuoye Waiboshan

The hackers eat all they can, and the general smiles.

I came from Dandong, took your E, the general said nothing, just took Bybit's Ethereum.

In crypto memory, only Kraken has not had a serious security incident. Only in 2019 did a large account get hacked and then have its assets stolen. The Kraken main site seems to have never lost assets. Of course, this may also be due to Kraken's good public relations.

Back to the $1.4 billion theft from Bybit, the actual culprit should be the problem with the multi-signature contract design of Safe, which led to hackers breaking through layers of defense and eventually successfully attacking the assets in the cold wallet. The configuration of cold wallet + multi-signature is already the highest security standard that the industry can provide.

Fortunately, in addition to CZ's usual "normal performance", the remaining exchanges, OTCs and big players have all expressed their support on the surface, stabilizing the sentiment of retail investors. After all, it is the leeks who bear everything.

Ben Zhou is worried late at night, and there is no FUD in the group.

The previous experience, the industry influence of Mentougou and FTX saved Bybit.

After the Mentougou theft, the entire crypto industry entered its first cold winter. At that time, the main trading currency was BTC, which was far less than the later altcoins and Meme.

In 2022, FTX was not stolen, but cheated. SBF cheated users, and CZ cheated SBF, and Sun Ge's usual gags were mixed in.

SBF claimed that it did not misappropriate user assets, but in fact, its insolvency made it difficult for users to withdraw money. FTX did not immediately prohibit the suspension of currency, which led to a crazy run on users. To make matters worse, CZ, who pointed out the emperor's new clothes, first expressed support for SBF and even wanted to acquire FTX, and then said that FTX was insolvent and gave up the acquisition.

In a flash, CZ's few tweets on Twitter completely defeated FTX.

So when Ben Zhou saw CZ's comment that users should be banned from withdrawing coins immediately, I don't know what he thought. CZ may really think that his suggestion is a good one, but Ben Zhou doesn't think so.

Off the market, the second and third-tier exchanges that were extremely united took collective action to rescue Bybit, while the US exchanges did not move, and the big players and institutions did not speak, which staged a night of saturation rescue.

Bitget supported 40,000 ETH, showing the friendship between peers. As rivals struggling in second-tier exchanges, they rarely stood together this time. Of course, there are rumors that the two have common shareholders. Even so, it is commendable.

However, Binance, the most critical, has not seen any substantial help except for the expressed help, while OKX just blindly built its own wallet and reviewed the contract over and over again.

The most unexpected thing is that US regulators, such as the SEC, also became silent this time. They are not so friendly at ordinary times. It seems that Ma Dugong’s rectification and Trump’s crypto-friendliness are indeed carried out to the end. Jiangjun and Dong Wang are now both winners.

Call back After Mentougou and FTX, Bybit’s best response this time was the boss himself. It seems that being a self-media really trains people.

A trader who doesn't want to be a KOL is not a good boss

The great advantage of the crypto industry is that it is flat, both internally and externally. Binance used to fire employees who did not report their cryptocurrency trading, which was originally a compliance move to deal with insider trading, but now it has missed the entire on-chain era.

Bybit's flatness is to abandon Bitget's celebrity CEO and professional manager mechanism, and the boss himself becomes an Internet celebrity. Of course, the big boss behind the scenes still keeps a low profile as always, but Ben Zhou often appears as an English KOL. He should be one of the Chinese exchanges with the best foreign popularity, second only to CZ.

However, there was also a pleasant surprise. Ben Zhou’s Kaito quickly rose in the rankings and surpassed Coinbase co-founder Armstrong. It was really unfortunate for the exchange and fortunate for Twitter, as it contributed a lot of Crypto traffic to Musk.

The emphasis on traffic is also a huge plus for Bybit this time. It can even be said that the first principle of crisis public relations is to remain calm and open. Of course, the premise is to have the capital to handle it calmly. First of all, we have to thank the hacker. The 4.2 billion USDT in the cold wallet was not stolen because Tether would be frozen; secondly, we have to thank SBF. It was after the FTX incident that all major exchanges put up PoR asset reserve proof.

And this rescue of Bybit also proves the effectiveness of the PoR mechanism. Major exchanges have indeed divided their own assets and user assets. We may also have to thank Vitalik. After all, the great development of ZK technology is inseparable from him.

During the 48 hours of crisis management, Bybit maintained the market's confidence in itself and ETH, but the problem was not solved. Binance was fined 4.2 billion and was accused of frequently listing "girlfriend" coins. It may take several years for Bybit to maintain its market position and regain the confidence of institutional customers.

It is a commonplace topic that the source of profit for exchanges is user losses, and under asset management and pledge models, the exchange's profits can come from the chain, which at least theoretically avoids the accusation that customer losses are the source of profit.

But this was in the past. In the face of huge financial losses, any means may appear. Next, it depends on whether Bybit is stable and willing to spend another cycle to establish a normal income model.

The opportunity for DEX Flip CEX?

In theory, after a crisis in CEXs, DEXs will have new traffic influx. After all, the saying "Not Your Keys, Not Your Coins" is still fresh in our minds. But today, the problem is very complicated. If it is a coin hoarding party that keeps its own cold wallet, it is indeed safe.

For on-chain tools and trading products, only the OKX Web3 wallet is a non-custodial wallet, that is, the private key is the only credential to access and control cryptocurrency. Mastering the private key means full ownership of the assets in the wallet. As long as the private key is not leaked, there will never be a problem. Security is guaranteed by cryptography.

However, for most trading products, custodial wallets are the norm. The reason is not complicated. It is more efficient and user transactions will be smoother. Security and efficiency can never be achieved at the same time.

Especially for trading tools that focus on multiple chains and multiple currencies, and numerous TG Bots, they basically adopt the strategy of reducing security and switching to CEX. Even Hyperliquid responded to the hackers of the general last year.

Exchanges can defend against 100 attacks, but hackers only need to succeed once. Air defense, air defense, nine out of ten defenses will fail.

In the current compensation cases, Mentougou and FTX can enter the compensation process, but it is difficult for DEXs to recover stolen assets, such as the recent DEXX.

What's more serious is that all security cannot last long, and Curve fixed the contract back then, but it didn't expect that the programming language for writing contracts would have problems. In the end, it could only encourage users to migrate assets and rewrite contracts. Personally, I feel that this is the safest way for DEXs, but it still can't stop "diligent" hackers.

Conclusion

Humanity doesn't thank Luo Ji, and users don't just have Bybit, but they just feel the same. The dark forest on the chain has long adhered to social Darwinism. The theft of Bybit is social news, and the retail investors who are attacked by hackers every day are even worse, and there is no news. I feel the same way. This is why retail investors sympathize with Bybit.