As a seasoned crypto investor with years of experience navigating the digital asset landscape, I find it reassuring to see that DeFi platforms are becoming more secure compared to their centralized counterparts. The decline in exploits and the adoption of advanced security mechanisms like zero-knowledge cryptography and multi-party computation are promising signs for the future of decentralized finance. However, it’s important not to let our guard down, as the rise in phishing scams and memecoin-related rug pulls demonstrates that there’s still a need for increased investor education.
Based on a report released today by the blockchain security company Hacken, there was a significant drop in security incidents involving decentralized finance (DeFi) protocols in 2024. In contrast, centralized finance (CeFi) platforms experienced a substantial increase in losses due to security breaches, more than doubling from previous years.
DeFi Platforms Show Better Security Mechanisms
According to Hacken’s yearly “Web3 Security Report,” they highlighted the common patterns observed in the cryptocurrency sector regarding frauds and safety systems. The document mentions that the overall losses due to security breaches in the year 2024 amounted to a staggering $2.91 billion.
2023 saw a significant decrease of about 40% in losses associated with DeFi protocols, dropping from $787 million to $474 million. This substantial decline suggests that more sophisticated security methods like zero-knowledge cryptography and multi-party computation are becoming increasingly popular within the DeFi sector.
One major reason for the decrease in DeFi exploits was a significant drop in incidents of cross-chain bridge hacking. The financial losses from these attacks have been on a steady decline – dropping from approximately $1.89 billion in 2022, to $338 million in 2023, and eventually reaching $114 million in 2024.
Contrasting with DeFi platforms, Centralized Finance (CeFi) systems, such as cryptocurrency exchanges, experienced a substantial increase in losses, totaling $694 million in the year 2024. This amount is more than twice the loss of $339 million reported in the previous year. CeFi platforms were responsible for nearly one-third of all crypto-related incidents, underscoring the ongoing weaknesses within centralized systems.
As an analyst, I’d rephrase it this way: In 2024, gaming and metaverse projects were unfortunately at the center of approximately 20% of all crypto-related security breaches, leading to a staggering total loss of $389 million. The most significant incident occurred in Q1 of that year, when the PlayDapp platform was exploited, resulting in a heart-stopping loss of $290 million.
In 2021, phishing scams continued to pose a substantial threat, resulting in over half a billion dollars in damages. These deceitful schemes showcase the growing complexity of social manipulation techniques within the digital world known as Web3.
In November, the sector encountered a $129 million incident of “deceptive addressing” attack. To provide some context, this type of attack occurs when hackers send minor transactions from an account that looks similar to one with which the victim has previously transacted. This leads the victim to unknowingly transfer funds to a fraudulent account in subsequent transactions.
Memecoins And Rugpulls Continue To Prey On Users
Throughout most of 2024, memecoins gained immense popularity. Particularly on the Solana (SOL) blockchain, thanks to its affordable transaction fees. However, a substantial number of these memecoins manipulated investors through presale scams and rug pulls that were often backed by celebrity endorsements.
One notable example is the Hawk Tuah memecoin, launched by viral influencer Hailey Welch, popularly known as “Hawk Tuah Girl”. The coin’s value plummeted 95% shortly after launch, sparking severe backlash from the wider Web3 community.
The increase in fraudulent activities surrounding meme coins serves as a reminder of the importance of investor education, especially when dealing with risky investments like these. Right now, Bitcoin (BTC) is valued at $98,921 and has risen by 5.8% over the past day.
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2024-12-25 08:11