Decentralized finance (DeFi) platforms have become the target of criminal attacks this year.Investors in blockchain-based financial forms Billions of dollars have been lost to criminals targeting these platforms.
The total amount of funds deposited in DeFi services has soared from US$500 million in 2019 to US$247 billion this year.
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According to a report According to London-based Elliptic, the total losses caused by the exploitation of DeFi vulnerabilities totaled US$12 billion in the past year. Among them, fraud and theft accounted for $10.5 billion, seven times that of last year.
DeFi, which has attracted billions of dollars in investor funds, is also often targeted by hackers. They use weakly protected agreements and mainly use flash loans.
One of the popular attacks this year is the Poly Network hacking. Hackers took advantage of vulnerabilities in the multi-chain interoperability protocol. They took off with various cryptocurrencies worth about $600 million. However, they returned most of the stolen funds.
DeFi-the wild west of cryptocurrency
Elliptic is a company that tracks the flow of funds on digital ledgers that support cryptocurrencies. Recently, it was reported that the amount of DeFi exploits this year reached 12 billion U.S. dollars.
DeFi is often referred to as the “Wild West” of cryptocurrencies because it is still the most unregulated crypto field. The DeFi platform allows users to lend, borrow, and save—usually in cryptocurrency—without the involvement of middlemen such as banks.
Tom Robinson, Chief Scientist of Elliptic, said: “The DeFi ecosystem is an incredibly exciting and fast-growing field, and financial service innovation is happening at the speed of light.” A well-tested item. Criminals have seen an opportunity to take advantage of this.”
According to the report, the underlying technology of DeFi is built on an open infrastructure. However, the technology is “relatively immature and untested.” Errors and design flaws in the code allow criminals to target the platform.
DeFi market cap at $165.47B | Source: Crypto Total DeFi Market Cap on TradingView.com
Robinson said: “Decentralized applications are designed to eliminate any third-party control of user funds, so there is no need to trust.” “But you still have to believe that the creator of the agreement did not make coding or design errors that could lead to the loss of funds.”
Criminals can also easily wash the proceeds of crime without leaving any traces. The report stated: “The irreversible nature of encrypted transactions makes it very challenging to recover these funds.”
Call for supervision
With the staggering number of exploits facing this field, people are calling for the regulation of DeFi. Regulators are now also turning their attention to the industry. However, the actions of regulators in the coming months will play an important role in determining their future prosperity and development.
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