Paper Type
ERF
Abstract
Cross-chain bridges connect independent blockchains and carry the asset flows that make decentralized finance possible. Between 2021 and 2024, aggregate losses from major bridge exploits approached $3 billion, and the damage did not stop at the exploited bridges. Bridges hold pooled assets and issue derivative tokens that circulate as collateral across lending protocols and decentralized exchanges. A single exploit can cascade through chains and protocols with no direct relationship to the affected bridge. Empirical work on how bridge exploits propagate is limited. We apply network analysis to on-chain data from 15 cross-chain bridge exploits between 2021 and 2024 to trace how shocks spread through the ecosystem. The analysis extends financial contagion theory to decentralized infrastructure and identifies structural features associated with contained versus cascading failures.
Paper Number
1916
Recommended Citation
Errett, Kristin, "Contagion in Decentralized Infrastructure: How Cross-Chain Bridge Exploits Propagate Failure Across the Blockchain Ecosystem" (2026). AMCIS 2026 Proceedings. 12.
https://aisel.aisnet.org/amcis2026/sig_dspe/sig_dspe/12
Contagion in Decentralized Infrastructure: How Cross-Chain Bridge Exploits Propagate Failure Across the Blockchain Ecosystem
Cross-chain bridges connect independent blockchains and carry the asset flows that make decentralized finance possible. Between 2021 and 2024, aggregate losses from major bridge exploits approached $3 billion, and the damage did not stop at the exploited bridges. Bridges hold pooled assets and issue derivative tokens that circulate as collateral across lending protocols and decentralized exchanges. A single exploit can cascade through chains and protocols with no direct relationship to the affected bridge. Empirical work on how bridge exploits propagate is limited. We apply network analysis to on-chain data from 15 cross-chain bridge exploits between 2021 and 2024 to trace how shocks spread through the ecosystem. The analysis extends financial contagion theory to decentralized infrastructure and identifies structural features associated with contained versus cascading failures.
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