- Serious security flaws: The DeFi sector faces significant vulnerabilities, requiring urgent action to protect assets and maintain investor trust.
- Heightening concerns about investor protection: Large losses have led investors to increasingly seek strong security and legal recourse in the event of a breach, challenging the credibility of the industry.
Cryptocurrency hacks resulted in staggering losses of over $1.3 billion in 2023, highlighting the critical need for improved security measures within the digital asset ecosystem. The recent exploit that resulted in Ledger losing approximately $610,000 highlighted the ongoing vulnerabilities and need to prioritize security and privacy across the cryptocurrency space.
According to DeFiLlama data, the number of cryptocurrency startups and projects this year $1.3 billion lossA significant $5.69 billion has been leaked from DeFi protocols since June 2016, indicating an alarming trend in security breaches.
Security issues in the DeFi ecosystem
Chainlight co-founder Brian Pak highlighted persistent security holes within the DeFi ecosystem, noting that security breaches tend to occur more frequently as markets increase in liquidity during bull markets. Pak emphasized the need for proactive security measures and comprehensive audits within protocols to create a secure DeFi environment.
Summary of Top 5 DeFi Exploits of 2023
Mixin Network – $200 million hack
Based in Hong Kong last September mixin network Faced with a $200 million exploit. The network responded by beefing up its security measures and offering a $20 million bounty to the hackers to retrieve the stolen assets.
Euler Finance – $197 million flash loan attack
Euler Finance A flash loan attack resulted in the theft of $197 million. After negotiations, the attacker known as “Jacob” returned the stolen funds in return for a $1 million bounty.
Poloniex – $126 million security breach
Poloniex, owned by Justin Sun, lost about $126 million after hackers accessed its hot wallets. Sun promised full repayment, also offered a 5% white hat bounty to the hackers, and later resumed services for certain tokens.
Multichain – $126 million compromise
Multichain lost $126 million after its private keys were compromised and funds were transferred to unknown addresses. During the crisis, the company’s CEO disappeared, raising suspicions about his arrest by Chinese authorities.
Atomic Wallet – $100 million stolen
North Korean hackers stole about $100 million from Atomic Wallet and compromised about 5,000 wallets. Despite downplaying the urgency of the incident, the wallet provider faced legal action from disgruntled investors.