Developers of the Cosmos blockchain recently addressed a significant security loophole in the Inter-Blockchain Communication (IBC) protocol, which posed a threat to $126 million in digital assets, according to a report from a blockchain security firm.

The security flaw, identified by Assymetric Research, was reported privately through the Cosmos HackerOne Bug Bounty program and has since been rectified. This vulnerability, if exploited, could have resulted in a re-entrancy attack on IBC-connected blockchains such as Osmosis and other decentralized financial ecosystems within the Cosmos network. The security company estimated that assets amounting to $126 million were potentially at risk on Osmosis alone, but the implementation of rate limits likely mitigated further damage.

As a preventive measure, rate limits were enforced to regulate the volume of requests processed within a specific time frame, thus minimizing the impact of potential cyber threats.

According to reports, the vulnerability had persisted since the introduction of ibc-go, the programming language implementation of IBC, in 2021. It only came to light following the recent deployment of IBC middleware, which facilitated the transfer of ICS20 tokens (interchain token standard) across different chains.

ADSL, another security entity, emphasized the significance of this incident, illustrating how security assumptions can be compromised and new vulnerabilities introduced during the integration of new features. This underscores the necessity for a multi-layered defense approach and further examination of the security implications associated with cross-chain technologies.

Approximately three weeks ago, Cosmos developer Carlos Rodriguez resolved the issue, as evidenced by a GitHub commit. It is worth noting that a previous ‘critical’ security issue within the IBC protocol was identified in October 2022 and promptly addressed before any exploitation occurred.

The successful resolution of this security vulnerability demonstrates the ongoing commitment within the blockchain community to enhance the dependability and security of decentralized networks, safeguarding digital assets against potential threats and vulnerabilities.