$5 billion stolen by DeFi hacks

The Terra crash in May, the FTX bankruptcy in November – 2022 was more of a downhill ride for investors. The balance so far: billions burned, numerous companies in bankruptcy, permanent image damage. Hackers, on the other hand, are rubbing their hands. Cybercrime in the crypto sector has continued to rise this year. The DeFi area is particularly vulnerable. Recent example: Ancr.

History repeats itself

It’s the same old story: smart contract failure, millions of dollars in crypto assets lost. The DeFi protocol Ankr is currently affected, where a “minting bug” seems to have invited hackers to print coins in any quantity. According to the security company Peckshield, more than five million US dollars were pulled from the log by 21 hackers.

Unfortunately not uncommon in the DeFi market, where in 2022 according to Delphi Digital “$2.7 billion worth of cryptocurrencies lost to smart contract or protocol infrastructure hacks” An increase of 63 percent over the previous year.

North Korea behind biggest DeFi hack

Losing over $620 million, Axie Infinity’s Ronin Bridge attack in March went down as the biggest DeFi hack to date. Attackers took control of validators and were able to authorize withdrawals of large amounts of crypto assets. An action by North Korea’s busy hacker collective Lazarus, as it turned out afterwards. Peter Grosskopf, co-founder of Unstoppable Finance, described the attack to BTC-ECHO as a “setback for the public perception of the entire crypto sector”.

The hack was almost superseded by an attack on the Binance Smart Chain in October. Around $570 million was at stake. With a hard fork, the damage could be minimized. Still, it was a hugely losing month with over $650 million worth of stolen cryptocurrencies.

DeFi hacks hit 5 billion mark

According to Defillama the total value of hacked DeFi protocols – the Total Value Hacked – is around $5 billion. The biggest Achilles’ heel are bridges, which enable token exchange between blockchains. Bridges accounts for around half – $2.5 billion – of the stolen crypto assets in the DeFi space.

a dilemma, as the security service provider Quantstamp writes: “Although bridges present numerous risks and vulnerabilities, the need to transfer assets from one blockchain to another will not go away”. On the contrary: Bridges are playing an increasingly important role in the crypto sector. Which also increases the risk of exploits. “The more value flows across cross-chain bridges, the more attractive they become to hackers”, according to the analysis company Chainalysis. In view of the increasing networking in the DeFi area – keyword interoperability – hackers are likely to continue rubbing their hands next year.