DeFi
DeFi security not ready for crypto bull run, researchers say – DL News
What you will learn
- The expected crypto bull market will test the security of the sector, CertiK claims in a new report.
- Protocol and security researchers must learn from past mistakes, says crypto auditor.
Crypto investors expect another surge in 2024, but the sector’s recovery will also determine whether the sector has learned from the mistakes that caused $1.8 billion in losses due to security breaches. ‘last year.
That’s according to a new report from smart contract auditing firm CertiK, which warns that the bull run will come with new challenges.
“Looking ahead, the real test of DeFi’s enhanced security protocols awaits us in the resurgence of a bull market,” the report said.
“The goal is not to completely eliminate losses – an unrealistic goal in an industry that prides itself on cutting-edge innovation – but to continue to reduce the correlation between [total value locked] and losses due to hacks and scams. Such a trend would be the clearest indicator of a maturing industry that takes security seriously. »
Total value locked – or TVL – is a metric that tracks the amount of cryptocurrency locked in a DeFi protocol’s smart contracts or in all DeFi protocols running on a given blockchain.
This challenge comes at a crucial time for crypto. The industry has shown signs of recovery, with its market size doubling to $1.7 trillion over the past year.
The increase is partly due to anticipation of U.S. regulators approving applications for Bitcoin spot exchange-traded funds, which would make investing in digital assets easier for non-crypto natives.
But as the industry recovers from the crypto winter and the scandals that haunted it, it will need to ensure it has learned lessons from the past, CertiK suggested.
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“The proof of the pudding will indeed be in the consumption – and for DeFi, the next taste test could define its legacy and ultimate viability,” CertiK wrote.
Crypto lost less money to hacks in 2023
The past two years have seen roughly the same number of security incidents: 601 in 2022, according to last year’s CertiK report, and 751 in 2023, according to this year’s report.
However, losses suffered by different crypto organizations decreased by 51% to over $1.8 billion in 2023, compared to $3.7 billion stolen in 2022.
Funds lost to crypto hacks decreased in 2023.
This is in line with data from crypto data aggregator DeFi DefiLlama, which puts the total amount stolen in 2023 at $1.7 billion.
While some researchers previously attributed the drop to cryptocurrency prices falling from their 2021 peak, others, like TRM Labs and CertiK, say that’s only part of the story.
They argue that factors such as tighter monitoring and the increasing sophistication of protocols have played a larger role in the decline in the total value of losses.
“We would like to see this trend continue in a bull market to confirm that overall web3 security is indeed improving,” said Ronghui Gu, co-founder of CertiK. DL News.
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria. He covers DeFi and technology. To share tips or story information, please contact him at osato@dlnews.com.