Fewer crimes but more hacks, Decentralized Finance still has everything to prove
August 27, 2021 6:47 AM
DEFi, the black sheep of the crypto ecosystem - The cryptosphere is recording less and less illegal activity, except in the case of decentralized finance. The boom in the industry has made DeFi protocols a prime target for hackers, while projects have struggled to plug the many loopholes exploited by hackers.
DeFi under pressure: and an inglorious record for decentralized finance
According to CipherTrace's August 2021 Cryptocurrency Crime and Anti-Money Laundering Report, major cryptocurrency-related thefts, hacks and fraud amount to $ 681 million, from January to July 2021. DeFi, at it alone, concentrates ¾ of fraudulent activity, the amount of hacks in the sector amounting to 361 million dollars during the period. This number has been multiplied by 2.7 compared to 2020.
However, while these numbers seem significant, fraudulent activity relating to cryptocurrencies is actually on the decline. In 2019, fraud actually amounted to $ 4.5 billion, dropping to $ 1.9 billion in 2020. DeFi, on the other hand, is attracting an increasing number of fraudsters given its growth. Its TVL stood at $ 600 million at the start of 2020. That number now exceeds $82 billion, according to DeFi Pulse.
The DeFi of faults: moralizing hackers
DeFi was marked by the recent Poly-Network protocol hack. The hacker had exploited a loophole in the invocation of certain smart contracts. He had made over $ 600 million in loot. However, the thief subsequently told the Poly-Network team, which threatened him with prosecution by law enforcement authorities around the world, that he was "ready to return the funds", which he said. finally did in a gesture as surprising as it was unprecedented.
DeFi protocols belong on paper to the new finance, but they mostly look like Swiss cheese to some hackers. This hacker who managed to steal just under $13 million by attacking ThorChain (RUNE) even allowed himself to "teach the developers a lesson":
“I could have taken ETH, BTC, LYC, BNB and BEP20s if I had waited. I wanted to teach a lesson in minimizing damage. "
The list of hacks in DeFi is unfortunately too long to be exhaustively mentioned. For example, Pancake Bunny suffered 2 attacks within a few months, as if the first had not served as a lesson. Beyond reassuring marketing speeches and security audits, the reality of DeFi is that fortunes are made and fly into the pockets of hackers.