“Centralization issues” are the biggest culprits in attacks on DeFi, says CertiK

“Centralization issues” are the biggest culprits in attacks on DeFi, says CertiK

Decentralized finance, better known as DeFi, may not be ‘decentralized’ enough as attackers exploited centralized weak spots to drain users billions of dollars in 2021, according to research by blockchain security firm CertiK. .

In a new report on the state of DeFi security in 2021, CertiK researchers said that “centralization issues were the most common attack vector” within decentralized finance. The blockchain security firm cited 44 DeFi hacks that added $ 1.3 billion in lost funds in 2021. That’s an increase of more than $ 500 million compared to 2020.

“This highlights the importance of decentralization and highlights the fact that many projects still have to work to achieve this goal,” CertiK said, adding:

“Centralization is contrary to the spirit of DeFi and poses significant security risks. Single points of failure can be exploited by both dedicated hackers and malicious individuals.”

An investigation by ImmuneFi revealed that the value lost due to DeFi hacks and related scams exceeded $ 10 billion over the past year, This reveals significant discrepancies in the way exploits are classified and tracked. However, most research on the subject seems to agree that security exploits targeting DeFi projects have seen a significant increase.

Although DeFi exploits have undermined the legitimacy of crypto markets in the eyes of traditional investors and legacy financial systems, CertiK offered a silver lining: 2021 losses accounted for just 0.05% of the total cryptocurrency market capitalization, 17% less than the previous year.

The cryptocurrency market peaked at just over $ 3 trillion in November 2021, after starting the year below $ 800 billion, according to data from CoinGecko. DeFi was a major catalyst for cryptocurrency growth, as the sector’s total locked value went from less than $ 20 billion in early 2021 to an all-time high of nearly $ 260 billion in December. The total locked value, also known as TVL, refers to the assets that are being staked in the DeFi protocols.

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Total TVL has declined from record highs, but is still well above $ 200 billion. Source: DeFi Llama

CertiK cited the growing popularity of the Binance Smart Chain (BSC) as one of the biggest reasons for DeFi’s success. Between January and December 2021, the TVL of the BSC went from USD 62 million to USD 21,000 million, which represents an increase of 31,000%.

Demand for CertiK’s blockchain security services appears to be on the rise as more projects seek to avoid falling victim to scams and exploits. The company audited a total of 1,737 projects in 2021. As we previously told you, CertiK is approaching unicorn status after securing $ 80 million in Series B2 investments that concluded at the end of November 2021.

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