Decentralized finance (DeFi) investors should buckle themselves up for another big year of exploits and attacks as new projects enter the market and hackers become more sophisticated.
Executives from blockchain security and auditing firms HashEx, Beosin and Apostro were interviewed for Drofa’s An Overview of DeFi Security In 2022 report shared exclusively with Cointelegraph.
The executives were asked about the reason behind a significant increase in DeFi hacks last year, and were asked whether this will continue through 2023.
Tommy Deng, managing director of blockchain security firm Beosin, said while DeFi protocols will continue to strengthen and improve security, he also admitted that “there is no absolute security,” stating:
“As long as there is interest in the crypto market, the number of hackers will not decrease.”
Deng added that many new DeFi projects “don’t go through complete security testing before going live.
Additionally, a significant amount of projects are now exploring the use of cross-chain bridges, which were a prime target for exploiters last year, leading to $1.4 billion stolen across six exploits in 2022.
The comments mirror those of blockchain security firm CertiK, who told Cointelegraph on Jan. 3 that it doesn’t “anticipate a respite in exploits, flash loans or exit scams” in the coming year.
In particular, CertiK noted the likelihood of “further attempts from hackers targeting bridges in 2023” citing the historically high returns from attacks in 2022.
Crypto auditing firm HashEx founder and CEO, Dmitry Mishunin, said “hackers have gotten smarter, gained more experience, and learned how to look for bugs.”
“The crypto industry is still relatively new, and everyone is growing with each other, so it’s difficult to get too far ahead of bad actors.”
He added the amount of value in some DeFi projects made the industry “very attractive” to malicious actors, and that the number of hacks “is only going to grow going forward.”
Mishuin said these attacks may even spread outside of DeFi, with attackers setting their sights on “crypto exchanges and banks” that enter the market offering “more secure solutions for storing digital assets.”
Smart contract security and auditing firm Apostro co-founder, Tim Ismiliaev gave a more hopeful take, however, as he expects the space to “mature over the next five years, and new best practices for securing decentralized finance protocols will emerge.”
Too long; didn’t read
Interestingly, both Mishunin and Deng noted that many of the post-incident reports provided by blockchain security firms often fail to reach their target audience — blockchain developers.
“The people that read such analyses are average investors that are concerned about their money. Actual blockchain developers are too busy coding; they don’t have time to read stuff like that,” said Mishunin.
Meanwhile, Deng said the reports are usually about “event-based vulnerabilities and related recommendations,” so doesn’t often help other developers as they might still be vulnerable to other exploits.
He admitted, however, that reports on “general vulnerabilities” in DeFi “tend to do a good job of ramping up protection.”
“The reentrancy vulnerabilities are now not as common as they used to be.”
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