Bitcoin Bridges Urged to Adopt Time-Delay Locks After $40 Million Heist

Sergio Lerner, co-founder of RootstockLabs, advocates for implementing time-delay locks in Bitcoin bridges to prevent bridge bugs from causing total losses. This comes after a recent incident on Liquid Network's federation wallet, where approximately 4,000 $BTC were withdrawn through an unauthorized peg-out.

Lerner emphasizes that immediate settlement can turn a single validation error into a loss before operators have time to respond. He suggests that a mandatory delay between the creation of unbacked tokens and the release of real $BTC could have reduced the damage in this instance.

According to Lerner, Rootstock already uses a similar 4,000-block Bitcoin withdrawal delay through its two-way peg, which relies on specialized hardware security modules called PowHSMs. The devices independently verify that 4,000 Rootstock blocks have passed before signing a peg-out, preventing unauthorized early withdrawals.

Lerner proposes distributing revocation controls among independent functionaries using hardware-enforced rules rather than centralized administrative keys. This would prevent single points of failure or centralized censorship while allowing operators to temporarily withhold signatures during anomaly reviews.