Web2 and Web3 are two different generations of the World Wide Web. While Web2 is a centralized platform, Web3 is decentralized and powered by blockchain technology. The success of Web3 has been enormous, with many people now moving from Web2 to take advantage of its benefits. However, the path to Web3 is not always straightforward. It is complicated and requires a deep understanding of both technologies. Today's guide will ensure you have the right information to successfully move from Web2…
Hackers Stealing $10 Million Monthly From Defi Protocols In 2020
According to the latest reports, hackers are stealing an average of $10 million monthly from Decentralized Finance (DeFi) protocols. CipherTrace, a blockchain analytics platform, revealed this information today in a comprehensive report on the crypto space.
DeFi Protocols A Major Target For Hackers
According to the report, 40% of all crypto hacks in the first half of 2020 was targeted at DeFi protocols and exchanges. This resulted in a total loss of $51.5 million from January to June from these platforms, which was a massive rise from 2019,
The analysis also found that this percentage decreased to 21% in the second half of the year. Hackers had stolen a total of $47.75 million in the last four months. This represents an average of around $10 million monthly for the first 10 months of the year.
DeFi has enjoyed massive growth in 2020 and involves non-custodial financial products, including decentralized exchanges and protocols. Initially valued at $250 million in 2019, the sector has seen massive adoption this summer. This was largely due to protocols offering lucrative bonuses to investors for staking their tokens for a period of time. At the moment, it is estimated that over $14 billion worth of tokens has been plowed into decentralized protocols.
The sudden nature of growth has also caused a ripple effect as hackers have shifted their glances to this sector. Many DeFi products are new and unregulated, with some not performing security checks before launch. Hackers have profited from this, and CipherTrace acknowledges in the report that the DeFi sector has become a haven for money Launderers.
“DeFi protocols are permissionless by design, meaning they often lack any clear regulatory compliance, and anyone in any country can access them with little to no KYC information collected. As a result, DeFi can easily become a haven for money launderers.”
Notable Cases in 2020
There have been major causes of hacks within the Defi sector in 2020. Decentralized lending protocol bZx has been hacked three times in 2020. The first two hacks occurred in February, and the protocol lost $1 million, while the last hack in September resulted in the loss of $8.1 million.
Harvest Finance also suffered greater losses as the DeFi protocol lost $34 million to hackers in October. The reduced percentage of DeFi attacks in the second half of the year is due to the hack of centralized exchange KuCoin in September, where the hackers stole $150 million worth of tokens. Although much of the money has been rendered obsolete and blacklisted, the hacker continues to sell his remaining tokens.