Key facts:
Polygon has the equivalent of $4.6 billion in tokens on deposit.
Justin Bons believes that Polygon could be one of the biggest cryptocurrency scams.
Investment specialist Justin Bons came to notice this week for making a lengthy criticism of Polygon. Via Twitter, he expressed his concern due to the insecurity and centralization that this Ethereum sidechain has, thus adding to other accusations that have been made about the same.
Justin Bons, who is the founder and CEO of Cyber Capital, one of the first investment managers to launch a cryptocurrency fund, said: “Polygon in its current state is insecure and centralized!” And then he detailed, as “a warning to the wise,” as he said, that this could lead to a major scam.
The businessman charged: “It would only take 5 people to commit over $5 billion! 4 of those people are the founders of Polygon! This is one of the biggest exit hacks or scams that you just have to wait for it to happen.
Justin Bons explained that the network’s smart contract management key is controlled by a 5 of 8 multi-signature contract. That means, he clarified, that Polygon can gain complete control with only 1 of the 4 outside parties in conspiracy. In addition, he pointed out that those 4 are selected by Polygon, which is not exactly impartial.
In this way, control over the contract administration key is equivalent to the power to change the rules, he warned. And he expressed with concern: «At that moment everything becomes possible. Including the emptying of the entire Polygon contract which is currently worth over $5 billion!”
Although it is worth clarifying that, although the figure that Bons gave is very close to the one registered, it is not exactly that. According to the data explorer defillama, Polygon currently has tokens locked for the equivalent of $4.6 billionthat is, it still does not exceed USD 5 billion.
This figure positions Polygon as the seventh blockchain with the highest value locked (taking into account only those that specialize in smart contracts). The one with the highest volume is Ethereum, which exceeds it by more than 1,600% with USD 125.3 billion.
Justin Bons goes on to say, “Polygon has been completely opaque, in terms of its operational security and cryptographic ritual around creating that multisig, which is important to at least establish trust in multisig, bad as it is. either”.
“Without any of these guarantees, it is within the realm of possibility that a single person already controls the admin key!” he warned. The businessman indicated that Polygon does not have high security standards, nor adequate disclosure.
Furthermore, he mentioned that, to make matters worse, Chris Blec formally requested that disclosure and the Polygon team declined to respond. and criticized him for not providing an alternative. Chris Blec is the founder and maintainer of DeFi Watch, an organization that monitors centralization risk in decentralized finance protocols.
“This lack of response alone should be seen as a giant red flag!” Justin Bons said, expressing that there is a “lack of transparency.” However, he did make a caveat about Polygon’s founders saying that “they appear to be good people, despite this weakness, but they expose themselves to grave danger by being targeted as points of centralization.”
Given this comment, Mihailo Bjelic, the co-founder of Polygon, was present in the thread of Justin Bons manifesting that there is clarity on the use of multi-signatures. In fact, he shared a transparency report that they published in May 2021 because at that time they had already noticed discussions, concern and misinformation about his system.
Also, Mihailo Bjelic told him that multisignatures are used to increase security, not decrease it. Although he revealed that they are working to eliminate them.
The investment manager noted that his critique focuses on Polygon because it is one of the largest networks that has “this problem”. But he cautioned that it is common practice in the crypto ecosystem as a whole. As CriptoNoticias pointed out, certain forms of centralization are also reflected, for example, in the second layers of Ethereum and in other blockchains such as the BNB Chain (formerly called Binance Smart Chain).
He noted: “The higher the locked value, the greater the incentive and sophistication of potential attacks. Organized crime could target these individuals, potentially even through kidnapping and blackmail!”
Justin Bons Proposes a Solution to Eliminate Polygon Insecurity
Justin Bons ended his accusation by giving a possible solution to eliminate the insecurity he perceives in Polygon and that “there is no excuse” for not doing it. He believes that, first of all, the network has to decentralize its own government based on the holders of MATIC tokens, Polygon’s cryptocurrency.
He then understands that they should transfer the smart contract management key to the MATIC token holders, handing over control to the “Matic DAO”. On that, he estimated: “This will most likely require a migration to a new Polygon Smart contract.”
He clarified: “Obviously this would be very difficult and expensive to do. However, that is the price to pay for not doing things right to begin with. It is the price we pay for decentralization and the security that comes with it.”
Lastly, Justin Bons mentioned that he hopes his post can serve as constructive criticism. He considered that an acknowledgment of the problem that Polygon gives off and a commitment to solve it is necessary.