Bybit Hack: How ENS & IPFS Could've Prevented $1.5B Loss

The recent Bybit exploit serves as a reminder of the potential risks associated with centralized web infrastructure for crypto platforms.

Phishing attacks, DNS redirection, credential compromises, and API vulnerabilities have persistently affected the crypto industry, resulting in billions of dollars in losses for both users and exchanges.

What Happened?

In a high-profile exploit, attackers injected malicious JavaScript code into the Wallet UI by compromising a developer’s machine. This manipulated interface was then unknowingly used byBybit’s signers, who approved what they believed to be a legitimate transaction.

The result? A $1.5 billion loss—executed through a UI that looked completely normal on the surface. Even more concerning: the smart contract address remained unchanged, so the fraud was nearly impossible to detect until it was too late.

This wasn’t a flaw in the smart contract or a vulnerability in the underlying blockchain—it was a front-end exploit:

• Signers were presented with a manipulated transaction interface
• The UI tricked them into signing a malicious transaction
• Once signed, the funds were instantly and irreversibly stolen

This attack highlights a fundamental weakness in how many Web3 apps are deployed today—trusting frontends that can silently change without user awareness or verification.

1. How ENS + IPFS Could Have Prevented This

At Miracle Tree, we believe the solution lies in blockchain-based, verifiable infrastructure—specifically using ENS (Ethereum Name Service) and IPFS(InterPlanetary File System).

Here’s how this setup could have stopped the attack in its tracks:

• ✅ IPFS-hosted UI = Content Integrity
• ✅ ENS for Secure Access
• ✅ Tamper Detection Built In
• ✅ Verifiable by Wallets & dApps

When the Wallet UI is hosted on IPFS, it’s content-addressed—every version has a unique hash. Any change to the interface (including malicious injections) would generate a new hash, instantly revealing tampering.

Accessing the UI through a smart contract-controlled ENS domainremoves dependence on centralized DNS providers, which can be compromised.

Even if a company’s internal system is compromised,attackers can’t silently swap out the frontend.Any mismatch between the ENS record and the IPFS content hash would signal a breach.

Wallets and signing platforms can check both the ENS name and the IPFS hash before allowing any interaction—ensuring users are always working with the original, untampered UI.

Decentralized websites using Ethereum Name Service (ENS) and InterPlanetary File System (IPFS) offer a radically different approach. Unlike traditional websites that rely on centralized domain registrars, cloud providers, and vulnerable password-based authentication, ENS and IPFS create a trustless environment that hackers can’t easily exploit.

By adopting ENS domains and IPFS-hosted websites, crypto platforms caneliminate phishing risks, prevent credential leaks, and decentralize APIs, making it exponentially harder for hackers to pull off large-scale attacks. Let’s dive into the details.

2. Tamper-Proof Security Alerts Prevent Misinformation

When an exchange gets hacked, one of the first things attackers do is spread misinformation—either by shutting down official communication channels or posting fake updates to mislead users.

How ENS + IPFS Fixes This:

• ENS-hosted emergency pages — exchanges can set up a decentralized security portal (bybit-security.eth) that hackers can’t modify.
• IPFS makes security alerts untouchable — announcements stored on IPFS can’t be altered by attackers, unlike websites or emails, which can be compromised.
• Users always have a trusted source of information — instead of wondering if a Twitter post or email is real, they can check an immutable, verified ENS/IPFS page.

Example Use Case:

Bybit could maintain a permanent, verifiable "Emergency Security Portal"where users can check for real-time breach updates without worrying about faked emails or compromised tweets.

3. Transparent Proof-of-Reserves via ENS Records

One of the biggest concerns in crypto is whether an exchange is solvent. Traditional exchanges claim to have funds, but users cannot verify this without an audit, which can be manipulated.

How ENS + IPFS Fixes This:

• ENS domains can be linked to on-chain proof-of-reserves, making itimpossible to fake liquidity.
• IPFS can store verifiable audit data, ensuring historical transparency.
• Users can check funds on-chain instead of trusting centralized reports.

Final Thoughts: How Miracle Tree Web3 Development Helps Secure Crypto Platforms

The Bybit hack is a powerful reminder that in Web3, it's not enough to secure the backend — the frontend is just as critical. A single compromised UI can cost billions, even if the smart contracts themselves are flawless. At Miracle tree.Tech, we believe that the future of secure Web3 infrastructure lies in verifiable, tamper-proof design — powered by technologies like ENS and IPFS/Filecoin.

Our approach is built around:

• Decentralized UI hosting via IPFS/Filecoin to ensure content integrity.
• Smart contract-linked ENS domains that prevent DNS redirection and spoofing.
• Immutable security portals to combat misinformation in real time.
• On-chain proof-of-reserves tied to ENS identities for full transparency.

This isn't theoretical — these are practical, implementable solutions that could have significantly mitigated the Bybit breach , and can help prevent similar attacks across the industry.

Miracle Tree is committed to helping Web3 platforms adopt infrastructure that is:

• Verifiable by wallets and users.
• Resistant to tampering or spoofing.
• Transparent and cryptographically provable.

We’re not just building websites — we’re building the next generation of trustless, decentralized user interfaces for the crypto economy.The next billion users won’t adopt Web3 until they can trust it.

Ready to build a secure Web3 platform?

Explore Miracle Tree’s Web3 website development services and start building a hack-resistant crypto ecosystem today.