DeFi has a hack problem we need to solve
Tim Frost, CEO of digital wealth platform Yield App, says:
“As we emerge from one of the worst years for crypto hacks in history, DeFi has reached a turning point. According to Chainalysis, over $3 billion was stolen in 2022, with nearly half of that from DeFi. In fact, the total value locked in DeFi has wilted away from over $166 billion at the beginning of last year to just $39 billion today. This can be largely attributed to the crypto winter, but also to a severe lack of trust in a sector that is beset by hacks.
DeFi, while still in its infancy, remains one of the most exciting innovations in cryptocurrency. Yet despite its growth in recent years, smart contract exploits are still quite common. As observed by a group of crypto auditing firms this week, developers in DeFi are frequently spending much more time coding than they are analyzing exploit reports. In addition, many DeFi projects don’t go through complete security testing before they go live.
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Meanwhile, on the other side, hackers are becoming ever cannier about finding vulnerabilities and holes in these often hastily constructed smart contracts – bridge attacks alone accounted for around 70% of losses in 2022, according to Elliptic. As weak as they are, though, there are few solutions for those interested in moving assets from one chain to another.
We have to reach a point in this industry where we balance innovation with safety. And by safety, we don’t mean handing everything over to an opaque entity with savvy marketing. Instead, we must find a middle ground between security and yield-generating opportunities so that DeFi can truly thrive.”
