Why are DeFi attacks increasing by the day?

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Why are DeFi attacks increasing by the day?

 Why are DeFi attacks increasing by the day?
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Highlights

  • Leading blockchain security firm Certik in a detailed report highlighted that DeFi hacks and scams in recent months have resulted in a loss of over US$1.6 billion.
  • The month of March 2022 saw the maximum number of scams to the tune of US$719.2 million.
  • Industry experts believe that the primary reason behind so many DeFi attacks is the current volatile crypto environment, coupled with faulty code and flash loan attacks. 

It is no news that investing in crypto markets is a risky affair and if someone is not careful, he may lose billions in scams and hacks. In 2022, cybercriminals have found a particular liking towards decentralised finance (DeFi) space. Although DeFi has always been a contentious issue previously, the industry has reportedly lost billions in just the first four months this year. 

Industry experts believe that the primary reason behind so many DeFi attacks is the current volatile crypto environment, coupled with faulty code and flash loan attacks. 

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Leading blockchain security firm Certik in its report revealed that between January 2022 and April 2022, DeFi hacks, and scams have resulted in a loss of over US$1.6 billion. What makes this stat more striking is that this figure has surpassed the total amount stolen in 2020 and 2021 combined.  

Hacks and scams

The Ronin Bridge exploit, coupled with other hacks and scams, puts March 2022 as the month which saw the maximum loss of US$719.2 million. On 23 March, Axie Infinity’s Ronin Network was attacked, resulting in a loss of 173,600 Ethereum and 25.5M USDCs resulting in a loss of US$600 million.

April was a busy month too and saw 31 significant hacks. In the same month, around US$301.4 million was lost in flash loan attacks. The total amount lost due to flash loan attacks in the first three months of 2022 was around US$6.7 million. 

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One of the major reasons behind the mammoth amount was the US$182 million that was pulled out from Beanstalk Farms using a flash loan attack. Similarly, US$80 million was lost by Fei Protocol in a similar attack. Another US$10 million was lost during the AMM attack. 

More recently, on 1 May, the NEAR Protocol Rainbow Bridge was attacked. However, no funds were lost this time as NEAR Protocol had managed to suspend its operations upon seeing abnormal activities.

Why Are DeFi Attacks Increasing By The Day?

Conclusion 

With increasing hacks and attacks, the market participants need to be wary of such illicit market players involved in such attacks. There are a lot of tools and ways, like coin mixers, by which such miscreants can mask their identity and steal millions. Therefore, one must do thorough research before entering the market and make decisions accordingly. 

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