Thomas Daniels
A report from IntoTheBlock indicates that despite more than $1.7 billion being stolen in November alone, DeFi hacks are set to record their lowest losses in two years. Data from the blockchain analytics provider reveals that DeFi lending protocols and cryptocurrency bridges were the primary targets for hackers seeking to drain user funds. While lenders experienced 34 attacks resulting in $1.3 billion in losses due to theft, exploiters managed to pilfer almost double that amount in 10 separate incidents. Lucas Outumuro, head of research at IntoTheBlock, categorized DeFi exploits into two risk categories: economic and technical.
There is a higher number of technical exploits, but the losses stemming from economic factors are much larger. Most of the economic exploits can be attributed to flawed mechanism design, while the majority of technical attacks are due to smart contract vulnerabilities and inadequate private key management.
Throughout 2023, cryptocurrency platforms and DeFi protocols reported multiple hacks, with malicious actors stealing hundreds of millions in digital assets from some projects. In November alone, hackers made off with over $290 million from five platforms, targeting Poloniex, HTX, Heco Bridge, KyberSwap, and Kronos Research.
Despite the persistent threat of web3 exploits, TRM Labs reported a 50% decrease in crypto hack volumes, marking a significant decline compared to the previous year when bad actors looted over $4 billion.
Nonetheless, experts emphasized the need for increased focus on on-chain security and the development of tools to mitigate attacks. Sipan Vardanyan, co-founder and CEO of cybersecurity firm Hexens, emphasized that security would be a crucial area of focus in 2024 and beyond. Vardanyan stressed that companies must prioritize on-chain safety for the industry to achieve substantial growth. He stated that the two primary obstacles to the mass adoption of web3 are insufficient regulatory oversight and critical cybersecurity vulnerabilities, which are closely linked. Securing decentralized technologies must be a top priority to allow investors to operate in the space without the constant fear of financial devastation.
