Cybersecurity agency Certik, studying 2021 DeFi protocol hacks, found that 16.5% of cases were due to discrete centralization risks.
In a year, using the nodes responsible for the operation of the sites, the attackers withdrew $1.3 billion from DeFi, according to a report by the Certik agency. The blockchain auditing agency says vulnerabilities related to centralization elements in DeFi protocols have become a major avenue for hacker attacks.
Exploring the consequences of cyber attacks, Certik experts audited 1,737 smart contracts. 286 cases turned out to be cases related to discrete risks of centralization. This caused great concern among experts:
“Centralization is against the spirit of DeFi and poses serious security risks. Single points of failure can be exploited by hackers and malicious insiders.”
As an example, experts cite the hacking of the DeFi protocol bZx. In November 2021, attackers used phishing and an email with a malicious macro to gain access to two private keys and steal $55 million.
The agency notes significant growth in the DeFi sector in 2021. Decentralized exchange (DEX) trading volume has tripled, according to Certik. The total value of locked assets (TVL) in the protocols quadrupled despite the surge in Ethereum fees:
“There is obviously an insatiable appetite for decentralized applications based on smart contracts that Ethereum supports. DeFi, NFT and other applications like ENS have contributed to this growth.”
The company’s experts believe that Ethereum faced strong competition during the scaling. As a result, DeFi protocols Binance Smart Chain, Solana, Terra, Avalanche, Fantom, and Polygon have taken a third of the market share previously held by Ethereum in 2021.
Despite the high commissions in the Ethereum blockchain, TVL in its protocols has increased to 153 billion. The migration of users to other projects has exacerbated decentralization issues for Ethereum. One of the positive moments for Ethereum was the technical problems of the Solana protocol, which is positioned as an “Ethereum killer”.
According to a recent report by analytics firm Chainalysis, many DeFi protocols have vulnerabilities in their code that could be exploited by hackers. In 2021, scammers carried out 21% of hacks using exploits. In 2021, analytics firm Elliptic flagged a report showing that the volume of losses due to crime in the DeFi market increased sevenfold in 2021, to $10.5 billion.
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