Although 2020 was a landmark year for cryptocurrencies, there have been setbacks noticeable. Despite the growing widespread acceptance of virtual currencies, some governments continue to pursue policies that stifle innovation, placing their countries at a disadvantage in the emerging digital economy.

The decentralized economy has been a big topic of talks this year and the market sector has not disappointed, with massive investment growing over the course of 2020. But fraudsters have consistently deployed sophisticated scams and used DeFi’s noise to trick victims.

In addition, many projects have come under lucrative attacks through arbitrage and spot loans, and drained of funds from liquidity pools. Although there is an argument not to call these events “piracy,” it does significantly mitigate some of the growth challenges in the DeFi room as participants work toward the ultimate goal of democratizing finance.

In 2020, crypto exchanges are leaving big money in weak hot wallets. While cryptocurrency theft has decreased dramatically throughout the year, reports of platform penetration and use of user deposits and data are no less bad than they were in previous years, although the news is unlikely to affect the markets these days.

In terms of exchanges, 2020 is nearing its end, and many cutting-edge platforms still have to embrace protocol improvements like Segregated Witness or SegWit. Users are still paying more for transaction fees than they should, while some argue that exchanges continue to operate as altcoin casinos.

Install DeFi cheat
In February, Cointelegraph reported that DeFi was leaving the niche market and heading towards a regular offering. At the time, the total value of Ethereum (ETH) banned in the market recently crossed the $ 1 billion mark.

Currently, the total value of DeFi is approximately $ 14 billion, with a growing portfolio of projects and protocols offering services as diverse as lending, derivatives, and payments, among others. In fact, the growth of the DeFi market in 2020 was so huge that according to DappRadar, the volume of transactions in the decentralized apps increased by 1,200%.

User retention, which was the main track for DApps, paved the way for continued sponsorship when the DeFi “test” culture emerged in the second half of 2020. Even decentralized exchanges saw record high volumes, especially in the third quarter of the year.

In June, Compound Finance introduced liquidity operations and opened the portal for breeding operations. While prominent DeFi shareholders launched projects that sought to unify multiple financial markets, additional protocols emerged that used DeFi hype to defraud investors.

From meme coins to carpets and even malicious contract codes, unwanted people have constantly improved their strategies to get rid of more money from returning poachers in the DeFi room. On the one hand, automated market makers or AMMs like Uniswap have seen record volumes, but much of this trading activity has been geared towards supporting these “scammers” designed to steal money from victims.

Indeed, on several occasions throughout the year, Cointelegraph has highlighted the growing level of fraud in the DeFi room as a clear threat that could overshadow the segment’s leading performance. DeFi is currently the largest contributor to cryptocurrency crime, despite a general decline in cryptocurrency theft in 2020, according to analyst firm CipherTrace.

According to a CipherTrace report, the total loss from DeFi hack as of November was over $ 100 million. According to the cryptocurrency company, 45% of all cryptocurrency hacks were committed in the first and second quarters of the DeFi arena, and in the second half of the year, that share approached 50%. Malcolm Tan, Senior Advisor to DeFi AMM KingSwap, told Cointelegraph of his frustration with scammers in the sector and added:

“DeFi can shake the financial industry with digital technology, but progress is frustrated by fraudsters and carpet ventures that lead to loss of assets and public trust. Until these issues are eliminated and DeFi investors and their followers can place their assets in DeFi more safely and reliably, this growing industry will not grow significantly.
Loan attacks and outright cryptocurrency theft
As a growing segment of the market, it might not be surprising to see some bugs along the way as legitimate DeFi ventures mature. However, the regularity of exploit hijackers and other forms of opportunistic speculation have also been a concern across the sector throughout the year.

Source: CoinTelegraph