defi

Overview of Web3.0 security – Q2 2022

Recently, the Beosin organisation published its 2022 Quarter-2 Web 3.0 Security report. The report comprised of the latest hacks and exploits that affected the blockchain. Nearly $178 Million were compromised due to Web 3.0 related schemes. It was reported that April month was most active in terms of hacking where nearly nineteen major security incidents happened and approximately $374 million were lost. These losses went down in number by the month of May simultaneously with the price of Bitcoin. However, an interesting spike in the month of June was seen again despite the declined market conditions.

Nearly forty-eight major attacks were recorded in which three alone (Elrond, Beanstalk Farms, and Harmony) were accountable for more than $100 million in losses and twenty-eight between the scale of $1 million and $ 10 million. A common pattern was noticed among attacks as the DeFi was one of the hot targets for Web 3.0 hackers. DeFi enables users to perform financial services, such as lending and borrowing, in a decentralised way by utilising the smart contract facility. As per the data, the most common technique used by hackers was to exploit vulnerabilities present in the smart contract code which resulted in losses of $138 million. Another, common technique used by hackers was flash loans to obtain control of the protocol’s governance token, enabling them to pass malicious protocol changes. Defi loans that don’t need collateral, however, should be paid back before the transaction is pcompleted in short order known as flash loans. This attack compromised nearly $233 million in the second quarter more than any other attack. Further, it is reported that fifty-two percent of attacked projects have been reportedly audited.

More than half of the stolen funds in the second quarter were transported to Tornado Cash, which is a cryptocurrency mixing facility that assists thieves to cover up their tracks after attacking. From those funds, approximately $131 million in assets were also recovered.

One of the most compromised chains in the last quarter was Ethereum. It alone was the home of nearly $381.35 million in losses. Approximately $48 billion out of $77.11 billion over the entire ecosystem is still stored in defi protocols on Ethereum. This brought up DeFi as the number one place of security risk in 2022. DeFi has been the main focus of hackers for consecutively two quarters. Other projects, such as NFT, exchange security, and cross-chain bridge security attacks are not as common as compared to DeFi incidents.

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Last modified on July 27th, 2023 at 4:49 pm