Key Takeaways
- Bybit’s Lazarus Security Lab found 16 blockchains with built-in fund-freeze capabilities.
- Another 19 could add the feature with minor protocol updates.
- The findings reignite debate over centralization and on-chain governance transparency.
In an industry built on decentralization, a new report from Bybit’s Lazarus Security Lab suggests many major blockchains aren’t as trustless as they seem.
The lab’s analysis revealed that 16 leading blockchains — including Ethereum (ETH), Solana (SOL), BNB Chain (BNB), and Polygon (POL) — contain code that allows developers or governance bodies to freeze user funds.
While intended as a safeguard against hacks and illicit transfers, the findings have reignited a long-running debate: how decentralized are the systems that underpin the broader crypto industry.
Inside the Bybit Report
The report, titled “Blockchain Freezing Exposed: Examining the Impact of Fund Freezing Ability in Blockchain,” examined 166 blockchain codebases using an AI-assisted framework designed to detect freeze-related patterns such as blacklisting, address filtering, and transaction halts.
Among the 166 networks reviewed, 16 were confirmed to have native freeze mechanisms embedded directly in their architecture. These included:
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Ethereum — Emergency pause via governance (EIP-3074-like hooks)
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Binance Smart Chain (BSC) — Validator-based blacklist consensus
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Polygon — Dynamic address filtering in transaction pools
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Solana — Runtime configuration updates for blacklisting
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Avalanche — Governance-triggered transaction halts
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Tron — Built-in blacklist module
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Cosmos — IBC pause and address bans
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Polkadot — Parachain-specific freezes via relay chain
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Cardano — Hard forks with address exclusions
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Tezos — Governance votes enabling freezes
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Near Protocol — Shard-level transaction filters
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Algorand — Atomic transfers with revocation keys
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Hedera Hashgraph — Administrative token freeze controls
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Stellar — Clawback and freeze clauses in asset issuance
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Ripple (XRP Ledger) — Escrow and line-freeze functionality
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VeChain — Authority-based transaction controls
Bybit’s team noted that 19 other blockchains could easily adopt similar controls through small protocol tweaks — indicating how pervasive such mechanisms could become.
Pragmatic Security or Hidden Centralization?
The Lazarus report acknowledges that freezing functions can serve practical security purposes.
For example:
- Sui froze $162 million in stolen funds after the Cetus hack.
- BNB Chain blacklisted addresses during its $570 million bridge exploit in 2022.
- VeChain halted $6.6 million worth of compromised tokens back in 2019.
However, the same powers that enable rapid recovery also introduce a centralization risk.
According to the report, nearly 70% of freezing events occur at the validator or consensus layer, which isn’t always visible to end users.
In many cases, these “emergency controls” are controlled by governance councils, foundations, or core developers — entities whose decision-making processes may not be transparent.
How the Freeze Mechanisms Work
The study identified three main categories of freezing functionality:
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Hardcoded freezing – directly embedded into the blockchain (e.g., BNB Chain, VeChain).
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Configuration-based freezing – controlled through validator settings or foundation tools (e.g., Sui, Aptos).
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On-chain contract freezing – executed through system-level smart contracts.
Collectively, the 16 identified blockchains represent around 10% of all networks analyzed, but together they control more than 80% of total DeFi TVL — meaning that most user activity in crypto runs through systems that can be paused, frozen, or filtered at will.
The report concludes that while these mechanisms are “pragmatically useful for risk mitigation,” they risk eroding the fundamental trustless ethos of blockchain technology if not clearly disclosed or subject to transparent governance oversight.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
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