• 16 blockchains out of 116 can freeze funds through protocol-level mechanisms, challenging claims of full decentralization in crypto networks.

• Three key freezing methods exist: hardcoded in source code, config-based blacklists, and smart contract controls, used by networks like BNB Chain and Sui.

• 19 additional blockchains, including those in the Cosmos ecosystem, could implement freezing with minor changes, per data from Bybit’s AI-assisted review.

Discover 16 blockchains that can freeze funds, as revealed by Bybit’s Lazarus Security Lab. Explore risks to decentralization and key mechanisms—stay informed on crypto security today.

What Blockchain Networks Can Freeze User Funds?

Blockchain networks capable of freezing user funds include 16 protocols identified in a comprehensive study by Bybit’s Lazarus Security Lab. These networks feature built-in mechanisms at the protocol level that allow validators or developers to restrict transactions or balances. The analysis, covering 116 blockchains, underscores how such capabilities can undermine the core principle of decentralization in cryptocurrency systems.

The report utilized AI-driven tools alongside manual verification to detect these features, revealing hardcoded functions in popular chains. This finding prompts a reevaluation of trust in supposedly permissionless environments, where emergency controls might prioritize security over absolute user autonomy.

What Are the Main Mechanisms for Freezing Funds in Blockchains?

Bybit’s Lazarus Security Lab outlined three primary mechanisms for fund freezing across the 16 affected networks. The first involves hardcoded freezing functions or public blacklists directly embedded in the blockchain’s source code, enabling immediate restrictions without external configurations. For instance, five networks—BNB Chain, VeChain, Chiliz, Viction, and XinFin’s XDC Network—incorporate these features, as evidenced by their publicly available GitHub repositories.

The second mechanism relies on configuration files, such as YAML, ENV, or TOML, which are managed by validators, foundations, or core developers. Ten of the 16 blockchains fall into this category, including layer-1 protocols like Aptos, EOS, and Sui. This approach allows for more flexible control but limits accessibility to authorized parties only.

The third method uses on-chain smart contracts to maintain blacklists, with Heco Chain (formerly Huobi Eco Chain) being the sole example. This setup integrates freezing logic directly into the blockchain’s executable code, potentially offering transparency through public verification but still centralizing decision-making.

Source: Bybit’s Lazarus Security Lab

Additionally, the study highlighted 19 blockchains that could adopt freezing capabilities with relatively minor protocol adjustments. In the Cosmos ecosystem, module accounts—controlled by predefined logic rather than private keys—pose a particular risk. As the report notes, “This function could, in theory, be modified in the future to add a hacker’s address, but so far none of the blockchains in the Cosmos ecosystem have used it in this way.” Implementing such changes would likely require a hard fork and tweaks to files like the anteHandler.

Source: Bybit’s Lazarus Security Lab

Experts from Bybit’s team emphasize that while these mechanisms can aid in preventing theft—such as freezing hacked assets—they introduce censorship risks and centralization. A blockchain security analyst at the lab stated, “The line between protective measures and control blurs when admin privileges override user intent.” This aligns with broader industry discussions from sources like blockchain governance forums, where transparency in code audits is recommended to mitigate such concerns.

The research arrives amid heightened scrutiny of crypto infrastructure following major incidents. For example, after Bybit’s own $1.5 billion cold wallet breach, collaborative efforts with entities like Circle, Tether, THORChain, and Bitget successfully froze $42.9 million in stolen funds. Similarly, mETH Protocol recovered nearly $43 million in cmETH tokens. These recoveries demonstrate the practical utility of freezing functions but also fuel debates on their long-term implications for user sovereignty.

In the context of global regulatory pressures, such as asset freezes in scandals involving stablecoins like Libra, the findings resonate with ongoing efforts to balance innovation and compliance. Bybit’s analysis, drawing from 166 total networks reviewed (with a focus on 116 for depth), provides a data-driven benchmark for assessing decentralization claims across the ecosystem.

Frequently Asked Questions

Which Specific Blockchains Have Hardcoded Fund Freezing Capabilities?

According to Bybit’s Lazarus Security Lab report, five blockchains feature hardcoded freezing functions: BNB Chain, VeChain, Chiliz, Viction, and XinFin’s XDC Network. These are embedded in the source code, allowing protocol-level restrictions based on predefined blacklists or triggers, primarily for security responses like hack mitigations.

How Does Config-Based Freezing Work in Blockchain Protocols?

Config-based freezing operates through editable files like YAML or TOML, accessible mainly to validators and developers. Networks such as Aptos, EOS, and Sui use this method to manage private blacklists, enabling targeted fund restrictions without altering the core code. It offers flexibility for compliance but raises accessibility concerns in decentralized setups.

Key Takeaways

• 16 Networks at Risk of Centralization: Bybit’s study reveals that a significant minority of blockchains possess fund freezing tools, potentially compromising user control and decentralization ideals.
• Three Core Mechanisms Identified: From hardcoded code to smart contract blacklists, these tools vary in implementation but share the goal of rapid response to threats, as seen in post-hack recoveries.
• Future Vulnerabilities in Cosmos: 19 chains, including Cosmos-based ones, could easily add freezing via minor updates, urging developers to prioritize transparent governance.

Conclusion

Bybit’s Lazarus Security Lab report on blockchain networks capable of freezing funds illuminates critical vulnerabilities in 16 protocols, with mechanisms ranging from config files to embedded code in chains like BNB Chain and Aptos. As the crypto sector grapples with security and fund freezing mechanisms, enhanced code transparency and community oversight will be essential. Investors and developers should monitor protocol updates closely to safeguard assets in an evolving landscape—consider auditing your preferred networks today for informed decision-making.