Over $10 Billion Has Been Lost To DeFi Exploits In 2021

This year, criminals have attacked Decentralized Finance Platforms (DeFi). Blockchain-based finance investors They have been victim to cybercriminals who target these platforms and they have caused billions in losses.

DeFi Services has seen a dramatic increase in money deposits, from $500 million in 2019, to $247 billion.

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According to a ReportAccording to Elliptic, total losses due to DeFi attacks have reached $12 billion over the last year. This is according London-based Elliptic. One-fifth of the $10.5Billion was lost to fraud and theft, which is seven times as much last year.

Hackers have also targeted DeFi frequently, as it has been the source of billions of dollars worth in investor funds. These hackers exploit insecure protocols, mostly by using flash loans.

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The Poly Network hack was one of the most popular this year. Hackers exploited an vulnerability in multi-chain Interoperability Protocol. They ran off with approximately $600 million in various cryptocurrency. The majority of the funds they stole were returned by them.

DeFi – The Wild West Of Cryptocurrencies

Elliptic, a company that monitors the movement of funds on digital ledgers underpinning cryptocurrencies, is called Elliptic. Recent reports from Elliptic indicated that DeFi exploits reached $12 billion in 2018.

DeFi is often called the “Wild West” of cryptocurrencies because it is still the most unregulated area of crypto. DeFi platforms allow users to lend, borrow and save – usually in cryptocurrencies – without any involvement from middlemen like banks.

“The DeFi ecosystem is an incredibly exciting and fast-moving space, with financial services innovation happening at light speed,” said Tom Robinson, chief scientist at Elliptic. “This is attracting large amounts of capital to projects that are not always robust or well-tested. Criminal actors have seen the opportunity to exploit this.”

DeFi’s technology relies on an open infrastructure, according to this report. However, that technology is “relatively immature and untested.” There are bugs in code as well as design flaws that enable criminals to target the platforms.

Total DeFi market cap on TradingView.com

The market cap for DeFi is $165.47B. Source: TradingView.com Crypto Total DeFi Market Capital| Source: Crypto Total DeFi Market Cap on TradingView.com

“Decentralized apps are designed to be trustless in that they eliminate any third-party control of users’ funds,” said Robinson. “But you must still trust that the creators of the protocol have not made a coding or design mistake that could lead to a loss of funds.”

The proceeds of criminal activity can be easily laundered by criminals, leaving little trace. “The irreversible nature of crypto transactions make it very challenging to recover these funds,” says the report.

For Regulation, Call

Due to the increasing number of exploits, regulators are calling for DeFi regulation. The sector is also being watched by regulators. Regulators’ actions in the next months will be crucial in helping them thrive.

Featured Image from Aergo Chart, TradingView.com

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