Victoria d’Este
Published: December 27, 2024 at 12:11 pm Updated: December 27, 2024 at 8:14 am
Edited and fact-checked:
December 27, 2024 at 12:11 pm
In Brief
The DeFi ecosystem’s security has improved, with a 40% decrease in hacks, but centralized finance breaches increased by $694 million, highlighting ongoing system weaknesses.
The DeFi ecosystem’s security mechanisms have improved, as seen by the significant 40% drop in DeFi hacks over the previous year. Centralized finance breaches, on the other hand, increased significantly, amounting to $694 million, a statistic that highlights ongoing weaknesses in centralized systems. A thorough analysis of these patterns is provided in the Hacken 2024 Web3 Security Report, which also includes insightful information on how the Web3 threat landscape is changing.
Reduction of DeFi Vulnerabilities: An Upward Movement
The DeFi industry saw notable improvements in its security architecture in 2024. The total losses decreased significantly from $787 million in 2023 to $474 million. The increased security of cross-chain bridge protocols was a major factor in this development. Bridges, which were formerly a popular target for hackers, showed increased resistance as a result of the use of innovative cryptographic techniques like Multi-Party Computation (MPC) and Zero-Knowledge (ZK) encryption.
Photo: Hacken
Bridge-related damages had a substantial drop in the severity of exploits, dropping from $338 million in 2023 to $114 million in 2024. These improvements in bridge security demonstrate how the DeFi industry has been able to apply strong countermeasures and learn from previous accidents.
CeFi Breaches’ Increase
On the other hand, CeFi platforms had a difficult year. The $339 million recorded in 2023 was more than doubled to $694 million in losses. These breaches mostly affected centralized exchanges, with access control exploits responsible for a large percentage of the losses. Critical flaws in operational security were brought to light by high-profile instances such as the $230 million WazirX breach and the $305 million DMM Exchange attack.
All CeFi platforms have widespread access control flaws, most frequently related to compromised private keys or flaws in multi-signature schemes. These events highlight how urgently better access control procedures and decentralized fund safekeeping options are needed.
The Predominance of Exploits for Access Control
Across all industries, access control exploits became the most common danger, causing a startling $1.7 billion in damages. In 2024, 75% of all cryptocurrency hack losses fell into this group, up from 50% in 2023. These attacks, which affected DeFi, CeFi, and even gaming/metaverse systems, were mostly caused by private key breaches.
Notable examples include the $55 million Radiant Capital hack, which used malware to rig transaction approvals, and the $290 million PlayDapp hack, in which hackers used an access control flaw to manufacture illegal tokens. These illustrations show how urgently improved private key security procedures are needed.
Platforms for gaming and the metaverse also saw large losses in 2024, coming to $389 million. The PlayDapp breach alone was the most serious event in this industry, costing $290 million. Access control flaws were the cause of two more noteworthy cases: the $5 million Super Sushi Samurai hack and the $62.5 million Munchables attack.
The first quarter’s concentrated losses indicate that new platforms frequently find it difficult to put strong security measures in place, making them open to sophisticated assaults.
In 2024, phishing assaults continued to be an increasing worry, resulting in losses of more than $600 million. Attackers used strategies like address poisoning to trick victims in these more sophisticated frauds. The theft of $129 million via an address poisoning attack on the Tron blockchain was a well-known event in November. Such incidents highlight the vital need for user education and strong anti-phishing procedures, even though the stolen money was recovered.
Rug Pulls and the Evolution of Crypto Scams
Rug pulls were still a problem in the crypto world, especially on the Solana blockchain. These frauds were carried out quickly thanks to the creation of over 4 million tokens utilizing platforms like pump.fun. Memecoin rug pulls, in which developers dump large amounts of their token supply to drain liquidity pools, became more common as a result of Solana’s low transaction fees and fast network.
Presale scams gained prominence in 2024, with losses from Solana meme coins surpassing $122.5 million. Celebrity-endorsed rug pulls further muddled the situation, harnessing social power to entice investors before dramatically depreciating the tokens.
Strategies for Mitigating Security Risks
The Hacken 2024 Web3 Security Report’s list of recurring vulnerabilities emphasizes the necessity of taking preventative action in every industry. Key recommendations include:
Multi-layered security measures, such as the usage of hardware wallets, cold storage, and strong encryption, must be implemented by organizations. A systematic framework for reducing access control concerns is provided by the Cryptocurrency Security Standard (CCSS).
To lessen the impact of single points of failure, CeFi platforms must to think about including multi-signature wallets and decentralized storage options.
It’s crucial to spread knowledge about phishing scams, rug pulls, and other fraudulent activities. Investors need to be knowledgeable enough to recognize and stay away of any risks.
Regular security audits should be given top priority in DeFi initiatives, and ethical hacking should be encouraged to find flaws before bad actors can take use of them.
The divergent patterns in 2024 DeFi and CeFi security show both advancements and enduring difficulties in the cryptocurrency ecosystem. The rise in CeFi breaches emphasizes the urgent need for systemic changes, even while the DeFi sector’s advancements provide a model for improving security. Adopting advanced security procedures and maintaining constant watchfulness will be crucial to protecting digital assets as the Web3 ecosystem changes.
Disclaimer
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About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria d’Este
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
