Opinion by: Kadan Stadelmann, chief technology officer of Komodo Platform
Crypto didn’t get wrecked by regulators or some shadowy conspiracy. The industry did this to itself. It handed control of cross-chain liquidity to a handful of intermediaries, who it called “bridges,” wrapped assets in slick tickers, and pretended that was decentralization.
Every time one of these house-of-cards systems collapses, billions vanish, and the rest of the industry shrugs, as if these were isolated accidents instead of warning sirens blaring across the ecosystem.
Multichain’s collapse was a mess. The Ronin hack was one of the biggest crypto heists in history. More than $2.8 billion has been drained through bridge exploits to date, accounting for roughly 40% of all funds stolen in Web3.
These aren’t freak accidents; they’re the predictable result of trusting centralized choke points and calling them “innovation.”
The wrapped-asset system is a fragile illusion
Wrapped assets were sold as a way to connect fragmented ecosystems. In practice, they concentrated risk into a few validators, custodians or multisig groups. Bridges rely on intermediary chains, external consensus layers or a small number of operators to maintain coherence.
That’s not decentralized, and it’s even something Vitalik Buterin has discussed at length. It’s a centralized infrastructure wearing a mask. One breach, one compromised key, one exploit in a validator set, and the entire system can implode. The trust assumptions are huge, but most people barely understand them.
The consequences ripple out far beyond the bridge itself. When one of these systems fails, it doesn’t just affect a single token. Lending markets seize up, liquidity dries out, and entire decentralized finance (DeFi) ecosystems lose their backbone overnight.
Consider how much DeFi relies on wrapped Bitcoin (BTC), wrapped Ether (ETH) or wrapped stablecoins on non-native chains. These wrapped assets are treated like the real thing. Protocols are built upon them. Behind the scenes, they’re IOUs backed by a fragile set of actors who have repeatedly shown they can fail.
What makes this worse is that the industry saw it coming and did nothing about it. We ignored the warning signs after every exploit. Instead of fixing the core problem, we doubled down. We built higher on quicksand. Venture capitalists and projects funneled more liquidity into bridges. Exchanges listed more wrapped assets. Builders prioritized speed and liquidity over resilience. It was easier to pretend the problem didn’t exist than to rethink the infrastructure from the ground up. Everyone celebrated volume milestones, while the structural rot spread underneath.
Native trading is the infrastructure that crypto should have built all along
Native trading has been here all along. It’s not a marketing slogan. It refers to moving real assets directly between users, wallet to wallet, on their origin chains, without wrapped representations or custodial intermediaries.
That approach is not without limitations. Native swaps and atomic swap systems have historically faced challenges around liquidity depth, asset coverage and user experience, which is why bridge-based designs proliferated in the first place. Those constraints remain real — but they do not negate the systemic risks introduced by concentrating cross-chain trust in a small number of operators.
No wrapped IOUs, no pools, no intermediaries. When a swap fails, funds return to the users, not to a custodian that might disappear tomorrow.
Atomic swaps and hash time-locked contracts have existed for years, but they were difficult to build a user experience around. Instead of doing the hard work, the industry chased shiny wrappers. Bridges felt fast and modern, and the narrative drowned out the reality.
Related: The radical need for updating blockchain security protocols
Consider a scenario where a major bridge, holding billions in wrapped assets, collapses during peak market conditions. Liquidity that props up dozens of DeFi protocols vanishes overnight. Markets that depend on wrapped BTC freeze. Lending protocols face cascading liquidations. Traders rush to unwind exposure.
Fear spreads faster than any hack. We’ve seen a similar version before. When FTX collapsed, contagion ripped through every corner of the industry. Bridges have that same potential — maybe worse because they’re so deeply embedded in cross-chain liquidity. One or two big bridge failures at the wrong time could trigger a liquidity crisis on par with FTX.
Regulators are circling, and institutions are paying attention. If the industry continues to outsource trust to a few multisigs and validator sets, regulators will step in with solutions that won’t align with crypto’s values. Or worse, users and institutions will lose faith altogether. The damage wouldn’t just be financial; it would be reputational. DeFi would appear to be a gimmick built on duct tape, and mainstream trust would evaporate.
This industry doesn’t survive without a return to first principles
The ethos that built this space wasn’t about speed at all costs. It was about removing middlemen, trusting code over custodians and building systems that don’t rely on a few operators to behave perfectly forever. That ethos has been sidelined in favor of convenience. Native trading and trust-minimized protocols aren’t optional upgrades; they’re the return path to the foundation on which crypto was supposed to be built.
The next bull run won’t be defined by which memecoin pumps the hardest or which layer 2 runs the flashiest incentives; it will be defined by credibility. Users, institutions and regulators are watching closely. They’ve seen the bridge hacks, they’ve seen the collapses, and they won’t accept another cycle built on the same infrastructure. The industry has a choice to make. Keep pretending wrapped assets are “good enough,” keep ignoring the failure points and wait for the next black swan to force a reckoning. Or rebuild now on real, trust-minimized infrastructure that doesn’t blow up when the pressure hits.
The clock is ticking. The bridge problem isn’t some distant risk. It’s here, it’s embedded, and it’s growing. One more major exploit could set the entire industry back years. If builders don’t take this seriously, the market will, and the consequences won’t be pretty.
Opinion by: Kadan Stadelmann, chief technology officer of Komodo Platform.
