Decentralized Finance (DeFi) is here to join over $ 100 billion in Total Locked Value (TVL), a testament to your trust in these new financial instruments. This investment will continue to grow, but it looks like for every new TVL drive a new attack on the network with astronomical losses is reported.

Cryptocracy fell 57% in 2020, but DeFi hacks are on the rise and cost businesses and investors billions of US dollars. In March alone, there were several attacks in just five days, resulting in a $ 180 million loss for the paid network. Later in May, PancakeBunny lost over $ 200 million due to a quick loan.

It is understood that there are many loopholes and hacks in the current blockchain security protocols. From carpets to phishing attacks, the security and technology in this room isn’t as perfect as the numbers suggest. But there are important steps that developers and users can take to fill this gap.

Decentralized technologies are still in the spotlight
No matter how decentralized the protocol is, the underlying structure remains centralized. Given one of our core functions on the Internet, DNS records, every domain name is still central – owned by a government, state, or company that has authority over the domain and can block it if they want to.

An example of centralization within the framework of decentralization is smart contracts. Those who write smart contracts from Ethereum or Binance have the final say on what’s in the code and there are ways to code bad software like carpets into smart contracts.

In the summer of 2020, during the pruning boom, we saw several protocols emerge to make money from DeFi money making, and this continues until this year. In March, TurtleDex recalled a carpet that was actually a backdoor in a smart contract that resulted in $ 2.5 million being stolen from investors. This intended feature allows developers to program cheats that are then triggered based on other events in the code, and TurtleDex is one of many projects this year that are programmed to pull the mat out.

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Smart contract changes are a good way to prevent carpet pulling, but even so, we see cases where developers trade a revised smart contract for a non-revised one. The Compounder case demonstrates how easy it is for a fraudulent project to gain influence over famous and respected names in space. They were able to quickly take advantage of Harvest Finance and before outbilling users and running away from millions of dollars in cryptocurrency.

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Latest hacking trends
Aside from carpets, there are many common attacks that can bring down an entire company if you’re not ready. A 51% attack that occurs when a group of miners controls more than 50% of the hash rate of the network so that they can exclude or manipulate transaction records to perform double-use or disrupt the blockchain remains common. Both Firo and Green were recently 51% attacked.

Even some cryptocurrency projects with leading market volumes are still not protected. In February, it was reported that 200 days of XVG transactions on the Verge network were wiped out, which is effectively “the deepest rework ever done in the top 100 cryptocurrencies.”

We accept these mistakes as part of a blockchain experiment, but what would be the reaction if the same happened, for example, with a large bank? There will likely be a lot of media headlines and shots from users and customers. These developments go largely unnoticed in cryptocurrencies due to fewer users, but with the recent beef market this is changing. Control over the security of public blockchains will inevitably be tightened.

Fracture prevention techniques such as carpeting
Unfortunately for developers, cracking is almost always possible when dealing with cryptography. The question is not how to prevent hacking, but how to prevent your chances of being hacked. Several advances in hardware wallets, such as the Gnosis Safe multi-signature wallet, are key to improving overall security.

Using a multipurpose wallet, multiple users can store keys from the same wallet and require mutual participation to perform account actions. Since such a wallet requires multiple users to be able to shop, removing the carpet with this type of cabinet is nearly impossible.

Source: CoinTelegraph