With all things related to computers and the internet, there is an inherent risk of the technology or resource being exploite for their flaws. Last year hackers concentrated their efforts towards different decentralized finance (DeFi) projects. The amount of money lost due to the hacking of these. DeFi projects more than doubled to $1.3 billion in 2021. The vulnerability that was exploite the most was centralization. These findings were brought to public notice by Certik, the leading security-focused ranking platform. To analyze and monitor blockchain protocols and DeFi projects.
“State of DeFi Security”, the research report by Certik outlined the achievements as well. While the value lost reached 160%, the amount was still small in proportion to the total than it was in 2020. This was largely due to the growth of the DeFi market, the security firm said in the report released on Wednesday. As a proportion of the crypto market’s capitalization, losses dropped by 17%, according to the report.
According to DeFiLlama data, the total value locked (TVL) in DeFi protocols at the end of 2021 was $243.88 billion, up from $18.29 billion the year before. This means that the lost funds decreased to just 0.5% of TVL last year from 2.78% in 2020.
TVL value on 13th January 2021
The hacks exploited centralization as it was the most common vulnerability “by far,” the security firm said. Certik detected 286 discrete centralization risks from the 1,737 projects it examined, including privileged ownership. For example, some projects were draining when hackers obtained private keys that gave them complete control of smart contracts. This vulnerability could have been avoide if projects used multi-signature wallets or used decentralized autonomous organizations (DAO) instead of one or a set of private keys.
An event emission is information produced by a smart contract when it is execute. Missing event emissions was the second-most common vulnerability, followed by the use of an unlocked compiler version, code lacking proper input validation and reliance on third parties.
The report also states that Ethereum took the lead from the Bitcoin network on fee revenue. It now generates more than 64 times Bitcoin’s revenue and four times the number of daily transactions. But Ethereum also suffered from its success because high transaction fees sent users to other platforms. Certik noted the rise of Ethereum alternatives such as Binance Smart Chain. The Layer 1 protocol supported by Binance had TVL rise to 31,000% or $21 billion.
The security firm also raised $80 million in a Series B2 fundraising in December 2021, bringing its valuation to $1 billion.
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