The rise of the digital currency ecosystem brings a slew of issues, the most pressing of which is security. In the past year, innovative business sections, particularly decentralized finance (DeFi), have bore the brunt of security failings, with blockchain security and auditing firm Certik estimating total losses due to hacks at $1.3 billion in user assets.
In 2021, Certik evaluated a total of 1,737 projects, according to its latest DeFi security report. Ethereum-based projects account for around 42 percent of this total, with Binance Smart Chain-based projects accounting for the great majority of the remaining 36 percent. While it remains one of the most popular audit companies in the ecosystem, the increase in the number of innovators illustrates how broad the trend is.
Beyond DeFi, Certik noted that Non-Fungible Tokens and blockchain gaming, which became mainstream in the previous year, were newer trends. The drawback of this expansion is the inability to keep up with the necessary security to keep the space safe, with the centralization of operating models listed as one of the primary flaws among protocols that went wrong last year.
According to Certik research, blockchain security has become more critical than ever with such rapid growth. While the dollar worth of losses caused by hacks and exploits climbed, DeFi’s market capitalization percentage that they represented declined year over year. The most prevalent attack vector exploited in the $1.3 billion in user payments lost across 44 DeFi attacks was centralized issues. This emphasizes the necessity of decentralization while also emphasizing that many initiatives are still working toward this aim.
Apart from centralization, notable security flaws in the DeFi ecosystem included the use of an unlocked compiler version, dependency on third-party dependencies, and missing event emissions. While protocols like the Poly Network were hacked and the hacker restored all of the stolen assets, Certik feels that security will always be a huge concern as the ecosystem grows and becomes more sophisticated.