Industry experts have revealed that that decentralized finance, or DeFi, as it is commonly known has become a focal point for attackers, even though its aim is to decentralize finances. It appears that decentralized finance (DeFi) networks have become a favorite of cybercriminals in their goal to steal mobile and online funds and they are also after the sensitive and financial confidential data that could be used for accessing other legitimate accounts as well. According to recent research, enterprises had suffered losses of about a whopping $1.8 billion in cyberattacks that were focused on DeFi networks in the last year alone.
Cryptocurrencies like Bitcoin are also associated with decentralized finance (DeFi) because their infrastructure is similar. They also use blockchain technology for conducting their functions. Statistics showed that of 9 out of 10 cyberattacks were rather unsophisticated, which indicates that the security in the sector is quite lax. However, this does not mean that these attacks are specifically targeting currencies using the DeFi network protocol, which can provide great exposure. The last year saw about five DeFi attacks happening every week and about 51% of these attacks exploited bugs found in smart contracts.
When it comes to security experts, this seems to be quite a concern because smart contracts are recognized as records of transactions that are stored on the blockchain. It wasn’t until last year that the decentralized finance industry really managed to distinguish itself. The cryptocurrencies became integrated into more conservative practices, while the blockchain technology saw itself being used for a variety of applications. But, the rising popularity of this technology meant that it also drew the attention of cybercriminals and this means cyberattacks. People had their wallets emptied and their smart contracts exploited.Different types of scams have also happened in the space, such as exit and rug pull scams.
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However, it should be noted that these have more to do with fraud instead of security issues. Data shows that at least five attacks were launched on DeFi networks on a monthly basis and the most pointed ones occurred in the months of May and December. Similar to other cyberattacks, once attackers master a specific technique, they use it for hacking all platforms and applications that may be vulnerable before the loophole is fixed. There have been chain attacks where attackers not only targeted the smart contracts, but also their various forks, as all of them had the same vulnerability.
Experts believe that it was possible to avoid at least four of these five attacks on DeFi networks because they happened due to a vulnerable code, or because a project’s fork shared the same vulnerabilities as the original. Another reason these DeFi intrusions have become so common is the fact that most people don’t have the knowledge of how these smart contracts work. Hence, they cannot read the source code either and this also makes things convenient for attackers because they can use a front end to carry out their activities.