The complexity of the decentralized finance (DeFi) marketplace leads to excessive risks. This was stated by the co-founder of Ethereum Vitalik Buterin, speaking at the blockchain summit in Shanghai, writes by Colin Wu.
Vitalik said at the meeting that both DeFi and NFT are developing very well, but people are making DeFi very complicated, smart contract risks may exceed the benefits. He believes that the most useful agreement is the simplest one.
– Wu Blockchain (@WuBlockchain) October 27, 2021
According to Wu, Buterin complained about the excessive complexity of DeFi projects, which leads to high risks of using smart contracts. According to Buterin, the most useful solution is the simplest. The Ethereum co-founder also spoke out about non-fungible tokens (NFT). He believes that the area will have to go through several more crises before it can develop into an “economically sustainable” form.
Buterin’s concern is confirmed by the numbers. For example, over 2,500 DeFi-based projects have lost $ 1.7 billion in total over the past five years. The largest of these exploits is the Poly Network hack. The hacker managed to withdraw more than $ 600 million from the protocol. However, over time, the unknown person returned the cryptocurrency.
It is worth noting that the attacks did not significantly affect the development of the industry. Thus, the total value of assets allocated in various DeFi protocols has been steadily growing since the end of July. According to DappRadar, it has grown more than 450% since the beginning of the year to $ 157 billion.
Frequent and high-profile hacks of smart contracts have already led to the formation of entire startups on the market aimed at solving a ripe problem. Earlier, the startup for identifying bugs in DeFi raised $ 5.5 million in investment. According to Immunefi’s description, the site helps smart contracts to identify vulnerabilities, and the researchers themselves receive rewards for analysis.
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