Connect with us

DeFi

Transparency or security: Report analyses reasons behind DeFi hacks

Published

on

Source: Unsplash

After a huge year in 2021, hackers are continuing to target Defi platforms in Q1 2022. Chainalysis reported in a recent study about the increasing trend of malicious activities in the current year.

The bounty was indeed not enough in 2021 when hackers managed to steal $3.2 billion in crypto. They have already managed to scam $1.3 billion in Q1 of 2022. While the money was stolen from exchanges, platforms, and private entities, “the victims are disproportionately in DeFi.”

Let’s talk numbers

Observing the data below, the developing trend is a worrying one for DeFi communities. The report states,

“Almost 97% of all cryptocurrency stolen in the first three months of 2022 has been taken from DeFi protocols, up from 72% in 2021 and just 30% in 2020.”

Source: Chainalysis

The study also reflects on security breaches that allowed hackers to access victims’ private keys. The $615 million scam on the Ronin Network is one such example. The report confirms this pattern between 2020 and Q1 2022. During this period, 35% of all stolen crypto value is reported due to a security breach.

Source: Chainalysis

However, in DeFi protocols, most scams occur due to faulty coding. “Code exploits and flash loan attacks” account for most of the stolen money from such protocols.

As per the report,

“Code exploits occur for a number of reasons. For one, in keeping with DeFi’s faith in decentralization and transparency, open-source development is a staple of DeFi applications.”

The “transparency” factor helps the hackers to plan exploits by scripting vulnerabilities from the code.

Flash loan attacks are caused because of DeFi reliance on price oracles. “Secure but slow oracles are vulnerable to arbitrage; fast but insecure oracles are vulnerable to price manipulation.” While there are solutions for such increasing attacks, it will take time to implement them and ensure safety.

US ties Ronin hack to North Korea group

The U.S has blamed the $615million hack on the Ronin Network on a North Korean hacker group.

“The United States is aware that the DPRK has increasingly relied on illicit activities — including cybercrime — to generate revenue for its weapons of mass destruction and ballistic missile programs as it tries to evade robust U.S. and U.N sanctions,” a Treasury Department spokesperson said.

The group, dubbed as Lazarus, was called out by the spokesperson on a post on the official Ronin blog. It also said  that the U.S Treasury Department has sanctioned the address that received the stolen funds.

Read the best crypto stories of the day in less than 5 minutes

Subscribe to get it daily in your inbox.


Please select your Email Preferences.

Kanav is a journalist at AMBCrypto. He has a Masters in Media and International Conflict and is interested in areas of digital society, crypto developments in the political sphere and the socio-cultural impact of a crypto-society.

Click to comment

Leave a Reply

Your email address will not be published.

Disclaimer: AMBCrypto's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.