Hyperliquid, a leading platform in the DeFi sector, recently experienced an alarming event when North Korean hackers targeted their system, causing over $7 billion in market value to evaporate. This unprecedented attack led to significant panic within the community, resulting in Hype’s maximum decline of more than 25% on that day. As more than $150 million of on-chain ecological funds fled, the situation exposed severe vulnerabilities in the system, particularly in Hyperliquid’s bridge contract and validator mechanism. With $2.3 billion USDC assets relying on a 3/4 multi-signature among four validators, the security risks became glaringly obvious. This article delves into the technical analysis of these hot events from the perspective of blockchain security, focusing on validator mechanisms, North Korean hacker behavior, and potential mitigation measures.
Core Issue of the Validator Mechanism: Over-Centralized Design and Potential Attack Scenarios
The core problem lies in the over-centralized design of Hyperliquid’s validator mechanism, where only four validators are in charge of the bridge contract. This extreme multi-signature architecture places $2.3 billion USDC assets at risk, depending on the consensus of just three validators. Such a setup poses severe risks.
Validator Hacking Consequences
The penetration of the validator system can lead to dire consequences. Should a hacker gain control of three out of the four validators, they could authorize malicious transactions, transferring the entire $2.3 billion USDC to their address. The severity of this risk cannot be overstated. Standard firewalls would be nearly powerless to intercept such an attack, and unless the transaction is reversed from the Arbitrum cross-chain assets, decentralization would be entirely lost, undermining the core principles of blockchain technology.
Technical Intrusion Methods
North Korean hackers possess some of the most advanced hacking capabilities in the encryption industry. Their techniques include several advanced intrusion methods:
Social Engineering Attacks
Hackers often employ social engineering attacks, sending phishing emails with malicious links by masquerading as trusted partners or entities. This method aims to install RAT (Remote Access Trojan) on the target device, providing remote access for further exploitation.
Supply Chain Attacks
If a validator device relies on unsigned binaries or third-party components, hackers can capitalize on this flaw by inserting malicious update packages. This technique allows hackers to gain deeper control over the validator system.
Zero-Day Vulnerability Attacks
Zero-day vulnerabilities in commonly used software like Chrome can be exploited for executing malicious code directly on the validator device. Such attacks are particularly insidious, as they leverage unknown vulnerabilities that leave systems defenseless.
Credibility and Distribution of Validators
To address security concerns, it’s essential to evaluate whether validators are running the same code, operating in a decentralized build environment, and physically distributed. Critical questions arise regarding the security managed by a unified enterprise:
Are validators running the same code?
Is there a decentralized build and run environment?
Is there a physical concentration of validators?
Is the security of the validator’s personal device managed by a unified enterprise?
Ensuring the distribution and diversity of validators can significantly enhance security by reducing single points of failure and potential attack vectors.
North Korean Hacker Attack Methods: From Traces to Potential Threats
The behavior patterns of North Korean hackers have become increasingly systematic, indicating a series of methodical steps aimed at exploiting high-value targets like Hyperliquid. Their attacks focus on leveraging identified weaknesses and collecting data to facilitate future intrusions. Hackers targeted Hyperliquid for several compelling reasons:
Why Hackers Target Hyperliquid
High-Value Target
With $2.3 billion in USDC assets at stake, Hyperliquid presents an enticing target for any top hacker team. Assets of such magnitude provide ample motivation for launching sophisticated attacks. The appeal of successfully breaching this system cannot be overstated, as it promises substantial rewards for hackers.
Weak Validator Mechanism
The relatively weak validator mechanism at Hyperliquid lowers the threshold for control. Only three validators out of four need to be compromised to gain complete control over the assets. This low-threshold attack path is particularly attractive, making Hyperliquid a prime target for experienced hackers.
Trading Activities as Testing Means
Hackers often use trading activities to test system stability, identifying how transactions are processed and exploring potential weaknesses. By executing transactions, hackers gather valuable data on the behavioral patterns of Hyperliquid’s system, including transaction processing delays and anomaly detection mechanisms, which inform and support subsequent attack strategies.
Expected Attack Path
Anticipating the steps hackers may take allows for better-preparation measures. The likely attack path includes several stages:
Collect Identity Information and Social Activities
Gathering detailed information about the validators, including identity data and social activities, allows hackers to craft targeted phishing emails or messages.
Implant RAT on Validator Devices
Hackers aim to implant RAT on validator devices, achieving remote access and control. This step provides the necessary foothold for further exploitation.
Analyze Transaction Logic
By analyzing Hyperliquid’s transaction logic, hackers can understand the system’s inner workings and identify ways to submit fund withdrawal requests through forged transaction signatures.
Execute Funds Transfer
The final step involves executing the funds transfer, sending the USDC to mixing services across multiple chains for laundering. This obfuscates the transaction’s origin and destination, making recovery more challenging.
Expansion of Attack Targets
Even though Hyperliquid’s assets have not been stolen yet, the active transaction traces of hackers indicate ongoing “lurking” or “exploratory attacks.” These activities suggest that hackers are conducting reconnaissance and testing the system for vulnerabilities. The community should not underestimate these distant signs of potential attacks; they often represent crucial preparation stages before executing more severe actions.
Currently Feasible Mitigation Measures: How to Prevent Attacks from Occurring
To mitigate these risks and prevent future attacks, Hyperliquid must bolster its security infrastructure through several key measures. Addressing validator architecture, enhancing security protocols, and improving detection capabilities are essential steps toward safeguarding against potential threats.
Decentralized Validator Architecture
Increase the Number of Validators
Expanding the number of validators from four to 15-20 can significantly raise the complexity and difficulty for hackers attempting to control the validator majority simultaneously. This decentralization enhances the robustness of the system against attacks.
Adopt a Distributed Operating Environment
Ensuring that validator nodes are distributed across multiple global regions can provide a layer of physical and network isolation. This distribution makes it harder for hackers to target a concentrated group of validators and increases the resilience of the system.
Introduce Different Code Implementations
To prevent single points of failure, validators should utilize different code implementations. For instance, running dual versions of Rust and Go ensures that even if one implementation is compromised, the other remains unaffected, maintaining the integrity of the network.
Improving the Security of the Validator’s Equipment
Dedicated Device Management
All critical operations must be performed on dedicated devices managed by Hyperliquid, with a comprehensive EDR (Endpoint Detection and Response) system in place to monitor for potential threats.
Disable Unsigned Binaries
Only files verified by Hyperliquid’s unified signature should be allowed to run on validator devices. This measure prevents supply chain attacks by ensuring that only authorized code is executed.
Regular Security Training
Providing continuous education and training on social engineering attacks to validators can improve their ability to identify phishing emails and malicious links. Strengthening human factors in security can significantly reduce the risk of successful social engineering attacks.
Protection Mechanism at the Bridging Contract Level
Delayed Transaction Mechanism
Implementing a delayed execution mechanism for large-scale fund withdrawals (such as amounts above $10 million) allows the community and the team sufficient time to respond to potential threats.
Dynamic Verification Threshold
Adjusting the required number of validator signatures based on the withdrawal amount enhances security. For example, requiring 90% of validator signatures for large transactions can ensure a higher level of scrutiny and reduce risks.
Improving Attack Detection and Response Capabilities
Blacklist Mechanism
Collaborating with Circle to directly reject transaction requests from known malicious addresses can prevent unauthorized withdrawals. Establishing and maintaining a comprehensive blacklist adds an extra layer of security.
On-Chain Activity Monitoring
Real-time monitoring of all on-chain activities, such as sudden spikes in large transactions or anomalous validator behavior, can provide early warnings of potential attacks. Proactive monitoring allows for timely interventions to mitigate threats.
Summary
The breach of the validator system could lead to devastating consequences. If a hacker were to seize control of three out of the four validators, they could authorize fraudulent transactions, potentially transferring the entire sum of $2.3 billion USDC to their own wallet. The gravity of this threat is immense and cannot be understated. Typical firewalls would likely be ineffective in intercepting such an attack. This risk emphasizes the vulnerability within the system. Unless the fraudulent transaction is rolled back from the Arbitrum cross-chain assets, the fundamental principle of decentralization would collapse. This situation would severely compromise the core values of blockchain technology. The importance of securing validator systems is paramount to preserve the integrity and trust in decentralized finance. Strengthening security measures and ensuring the robustness of these validators are critical to maintaining the foundational ideals of decentralization and preventing catastrophic financial losses.