Many hackers have turned to the DeFi (decentralized finance) space due to its growing popularity and the lack of regulation surrounding it. Developers are driven to create robust code to protect their protocols and applications. In this context, a group of developers from the Ethereum community proposed to create a new standard to strengthen security in DeFi protocols.
What features could this new standard bring?
This new standard is currently being discussed at the Ethereum community level. baptized ERC-7265 (Ethereum Request for Comments), the proposed standard would introduce a mechanism that would act as a “ circuit breaker » (circuit breaker).
The developers behind this proposal pointed out that bridges (bridge), oracles, smart contracts and the like weren’t the root reason for the hacks. They noted that the response time of most projects was simply too long to react to a hack.
To correct this, the circuit breaker triggers a temporary shutdown of protocol-wide token outputs when a threshold is exceeded for a predefined metric. This circuit breaker will not change the underlying protocol structure. It will mainly serve as a transmission vehicle for token outputs:
“When a hack occurs, the attacker will no longer be able to clear an entire contract in seconds. The majority of funds can be recovered.”
This feature should provide a maximum flexibility developers to maintain proper internal accounting for built-in protocols. Thus, developers can specify whether the corresponding smart contract should delay settlement and temporarily halt token exits or roll back attempted exits.
Making DeFi safer for users
A report recently released by the team behind the crypto wallet app Challenge revealed that Ethereum had the highest number of losses due to hacks and hacks. In addition, BNB Chain is the blockchain where the number of hacks had been the highest. Given the importance of Ethereum and BNB Chain for this sector, these results are not surprising.
The developer answering to the pseudonym Meir Bank has also noted that hacks of DeFi protocols often have catastrophic consequences:
“When protocols are hacked, they often lose everything. TVL [valeur totale bloquée] can drop to zero in seconds. »
Like Ethereum Improvement Proposals (EIP), ERCs are proposed standards that define how specific features or functionality should be implemented on the Ethereum network. It remains to be seen whether this proposal will be accepted by the main Ethereum developer team.
Sources: Github, Twitter