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The rapid growth of decentralized finance (DeFi) has led to a surge in multichain networks and the bridge transactions that connect them. While innovative, this growth introduces significant interoperability monitoring challenges and necessitates a new approach to multichain tracking.
To help navigate these challenges, Amberdata provides wallet intelligence, enabling you to track assets as you move across different blockchains.
The Challenges of Monitoring Cross-Chain Environments
Each bridge architecture presents distinct vulnerabilities that bad actors can exploit:
- Liquidity pool bridges: Liquidity manipulation and MEV sandwich attacks.
- Validator-set bridges: Compromise of validator keys or collusion among validators.
- Wrapped token bridges: Custodial failure and smart contract exploits.
Core tracking issues include:
Transaction Tracing Complexity
Transactions may fail on the destination chain while succeeding on the source chain. It is essential to track failed transfers, partial fills, and slippage events that create ambiguous settlement states.
Finality and Confirmation Risk
Different blockchains offer different finality guarantees. Implementing chain-specific confirmation thresholds is crucial before marking transactions as settled.
Identity Persistence Certification
Chains derive wallet addresses differently, which creates a false-positive risk. Verify that cross-chain activity belongs to the same beneficial owner through additional KYC/AML checks.
Technical Solutions for Multichain Monitoring
Effective cross-chain monitoring relies on unified address monitoring systems that track a single entity across multiple chains and advanced methodologies for linking transactions as they pass through bridges. For instance, rapid sequential bridging from Ethereum to Arbitrum to Optimism in five minutes may indicate layering, a process that obscures the origin of funds.
Specialized bridge transaction monitoring, which applies risk scoring based on bridge type and other factors, identifies suspicious activity at these key points. The goal is to establish a unified reporting framework that offers a single, comprehensive view of risk across all networks.
Amberdata offers a unified API and data platform that enables consolidated reporting and cross-chain transaction linking.
Risk-Based Approach to Bridge Transaction Monitoring
A risk-based approach to bridge transaction monitoring begins with a security assessment framework that evaluates the inherent risks associated with different bridges. By conducting volume and pattern analysis, cross-chain monitoring teams identify anomalies that may signal illicit activities.
For example, transactions that fail mid-bridge may signal probed transaction testing, while large transactions during periods of low liquidity could indicate market manipulation. The risk-based strategy also involves performing counterparty due diligence for cross-chain activities and implementing a risk-tiered system where high-risk bridges and transactions receive more intensive scrutiny.
Amberdata delivers real-time alerts and risk scoring for addresses and transactions, allowing you to apply a risk-based approach more efficiently.
Why Trust Us for Wallet Intelligence?
Since fragmented, single-chain views are no longer sufficient for institutional risk management, leaders like Franklin Templeton and Moody's rely on Amberdata for extensive data.
Our unified, multichain view of any wallet enables you to assess counterparty risk, conduct enhanced due diligence, and continuously monitor for illicit activity. We deliver these critical solutions through a single API, empowering you to automate workflows and act with confidence.
Achieve End-to-End Cross-Chain Visibility
Overcome interoperability challenges and build a more effective program for cross-chain monitoring. Schedule a demo of Amberdata's wallet intelligence solution today to get started.
