Blockchain Networks Use Various Fund-Freezing Systems
Bybit’s Lazarus Security Lab found that many blockchains include built-in fund-freezing features. This raises concerns about decentralization, censorship resistance, and user control over assets.
The researchers examined 166 blockchain networks. They discovered 16 networks with direct fund-freezing features. Another 19 could add these functions through minor protocol changes. The freezing methods fall into three categories: hardcoded logic, configuration file controls, and smart contract execution.
Types of Freezing Mechanisms
The report titled “Blockchain Freezing Exposed” explains the three main freezing types.
- Hardcoded Logic: Freezing is embedded in the blockchain software. Networks like BNB Chain and VeChain use this method.
- Configuration File Controls: Developers or validators can enable or disable freezing through configuration files. Sui and Aptos employ this approach.
- On-Chain Contract Execution: Smart contracts allow administrators to freeze or unfreeze wallets instantly. HECO and Klaytn use this model.
Fund Freezing After Major Hacks
The Lazarus team launched the study after Sui Foundation froze over $160 million in tokens stolen during a hack on the Cetus decentralized exchange this year. This prevented further loss but questioned the real power behind “decentralized” networks.
Many blockchains added freezing tools after major thefts. VeChain introduced its blacklist system in 2019 after a $6.6 million hack. BNB Chain added freezing features following a $570 million breach in 2022.
While these functions help recover stolen funds, they also increase concerns about centralization and authority control.
Balancing Security and Decentralization
The report stresses that freezing features can improve security and prevent fraud. However, they risk undermining blockchain’s core principle of decentralization.
Enterprise blockchains increasingly include freeze controls for regulatory compliance. Older networks like Bitcoin and Ethereum remain fully decentralized without freeze functions.
Some developers view freezing as necessary for anti-money laundering (AML) and fraud prevention. Others consider them emergency tools. The Lazarus team argues that such powers should be transparent and governed collectively, not controlled by a single entity.
The researchers used AI to scan 166 open-source blockchain projects on GitHub. They searched for freeze-related code, blacklists, and permissions. Experts then manually verified the findings. Some freezing functions were hidden deep in the code, showing many users may not know how much control operators have.
The report highlights a growing gap between open, permissionless blockchains and permissioned networks with more control. As blockchain use grows in finance and enterprises, this gap widens. Developers must balance security with maintaining decentralization.
The study concludes that decentralized governance remains key but notes a slow trend toward more controlled frameworks. Transparency and limited use of control powers are vital to preserving trust.
